Question 1

A bond with a face value of $80,000 and a quoted price of 104 has a selling price of: (Round your final answer to the nearest dollar. )

Accepted Answer

A) $76,923. 
B) $80,000. 
C) $83,200. 
D) $88,000. 
A) $76,923. 
B) $80,000. 
C) $83,200. 
D) $88,000. C

Question 2

The carrying value of a bond immediately after the bond was issued was $225,000.The bond price was 96.The face value of the bond was: (Round your final answer to the nearest dollar. )

Accepted Answer

A) $216,000. 
B) $225,000. 
C) $234,000. 
D) $234,375. 
A) $216,000. 
B) $225,000. 
C) $234,000. 
D) $234,375. D

Question 3

For operating leases,the lessee obtains the risks and rewards of owning the leased asset.

Accepted Answer

A) True 
 B)False  False

Question 4

Because operating leases require the lessee to make rent payments,a liability is created,and it must appear on the lessee's balance sheet.The lease is longer than one year.

Accepted Answer

A) True 
 B)False

Question 5

Bonds with a 7% stated interest rate were issued when the market rate of interest was 6%.This bond was issued at:

Accepted Answer

A) par value. 
B) a premium. 
C) a discount. 
D) face value. 
A) par value. 
B) a premium. 
C) a discount. 
D) face value.

Question 6

If bonds have been issued at a premium,over the life of the bonds,the:

Accepted Answer

A) carrying value of the bonds will decrease. 
B) carrying value of the bonds will increase. 
C) interest expense will increase. 
D) interest payment will increase. 
A) carrying value of the bonds will decrease. 
B) carrying value of the bonds will increase. 
C) interest expense will increase. 
D) interest payment will increase.

Question 7

On July 1,2019,Brownlee Corporation issues $1,200,000 of 10-year,9% bonds dated July 1,2019 at 88.Brownlee uses the straight-line method of amortization.Interest is paid each July 1 and January 1.Brownlee Corporation's fiscal year end is June 30.The interest expense recognized for the first semiannual interest payment on January 1,2020 is:

Accepted Answer

A) $46,800. 
B) $54,000. 
C) $61,200. 
D) $108,000. 
A) $46,800. 
B) $54,000. 
C) $61,200. 
D) $108,000.

Question 8

On January 1,2019,Patterson Corporation issued $100,000,9%,5-year bonds with semiannual interest payments on June 30 and December 31.The bonds were issued at $96,149 yielding an effective-interest rate of 10%.Patterson uses the effective-interest method of amortization.The company's fiscal year ends on December 31.
Required:
Prepare the journal entries that Patterson would make on January 1,June 30 and December 31,2019.Round all amounts to the nearest dollar.Omit explanations.

Accepted Answer

The answer of On January 1,2019,Patterson Corporation issued $100,000,9%,5-year bonds...

Question 9

Bonds that mature on a single date are called ________.Bonds that mature on multiple dates are called ________.

Accepted Answer

A) mortgage bonds;serial bonds 
B) serial bonds;mortgage bonds 
C) debentures;special bonds 
D) term bonds;serial bonds 
A) mortgage bonds;serial bonds 
B) serial bonds;mortgage bonds 
C) debentures;special bonds 
D) term bonds;serial bonds

Question 10

Under the effective-interest method of amortization,the bond cash payment on each interest date is calculated by multiplying the:

Accepted Answer

A) face value of the bonds times the effective-interest rate for the appropriate time period. 
B) face value of the bonds times the stated interest rate for the appropriate time period. 
C) carrying value of the bonds times the stated interest rate for the appropriate time period. 
D) carrying value of the bonds times the effective-interest rate for the appropriate time period. 
A) face value of the bonds times the effective-interest rate for the appropriate time period. 
B) face value of the bonds times the stated interest rate for the appropriate time period. 
C) carrying value of the bonds times the stated interest rate for the appropriate time period. 
D) carrying value of the bonds times the effective-interest rate for the appropriate time period.

Question 11

Taylor,Inc.reports operating income of $300,000 and interest expense of $20,000.The average common stockholders' equity during the year was $50,000.The beginning assets balance is $60,000 and ending assets balance is $100,000.What is the leverage ratio? (Round your final answer to two decimal places. )

Accepted Answer

[($60,000

Question 12

Bonds that the issuer may pay off at a prearranged price whenever the issuer chooses before the maturity date are:

Accepted Answer

A) serial bonds. 
B) callable bonds. 
C) convertible bonds. 
D) debenture bonds. 
A) serial bonds. 
B) callable bonds. 
C) convertible bonds. 
D) debenture bonds.

Question 13

Operating leases are preferred over finance leases because operating leases that exceed one year do not increase a company's debt ratio.

Accepted Answer

A) True 
 B)False

Question 14

Callable bonds allow the issuer to pay off the bonds whenever the issuer chooses.

Accepted Answer

A) True 
 B)False

Question 15

NBC Corporation issued $610,000,9%,5-year bonds on January 1,2019 for $660,731 when the market interest rate was 7%.Interest is paid semiannually on January 1 and July 1.The corporation uses the effective-interest method to amortize bond premium.The total amount of bond interest expense recognized on July 1,2019 is:

Accepted Answer

A) $21,350. 
B) $23,126. 
C) $29,733. 
D) $27,450. 
A) $21,350. 
B) $23,126. 
C) $29,733. 
D) $27,450.

Question 16

Solderman Company issued $510,000,7%,10-year bonds for $422,800 with a market rate of 9%.The effective interest method of amortization is used and interest is paid annually.The journal entry on the first interest payment date would include a:

Accepted Answer

A) credit to Interest Expense of $35,700. 
B) credit to Cash of $38,052. 
C) credit to Cash of $35,700. 
D) credit to Interest Expense of $38,052. 
A) credit to Interest Expense of $35,700. 
B) credit to Cash of $38,052. 
C) credit to Cash of $35,700. 
D) credit to Interest Expense of $38,052.

Question 17

If the market interest rate is 6%,a $10,000,7%,5-year bond,that pays interest semiannually would sell at an amount:

Accepted Answer

A) less than face value. 
B) equal to face value. 
C) greater than face value. 
D) less than the maturity value. 
A) less than face value. 
B) equal to face value. 
C) greater than face value. 
D) less than the maturity value.

Question 18

Premium on Bonds Payable:

Accepted Answer

A) has a debit balance. 
B) is a contra account to bonds payable. 
C) has a credit balance. 
D) is deducted from bonds payable on the balance sheet. 
A) has a debit balance. 
B) is a contra account to bonds payable. 
C) has a credit balance. 
D) is deducted from bonds payable on the balance sheet.

Question 19

Immediately after the last interest payment,Henry Company converted $3,300,000 of its bonds into 330,000 shares of $10 par value common stock.The unamortized premium on the bonds at the date of the conversion was $890,000.As a result of this conversion:

Accepted Answer

A) liabilities decreased by $4,190,000 and stockholders' equity decreased by $4,190,000. 
B) liabilities decreased by $3,300,000 and stockholders' equity increased by $3,300,000. 
C) liabilities decreased by $4,190,000 and stockholders' equity increased by $4,190,000. 
D) liabilities decreased by $890,000 and stockholders' equity increased by $890,000. 
A) liabilities decreased by $4,190,000 and stockholders' equity decreased by $4,190,000. 
B) liabilities decreased by $3,300,000 and stockholders' equity increased by $3,300,000. 
C) liabilities decreased by $4,190,000 and stockholders' equity increased by $4,190,000. 
D) liabilities decreased by $890,000 and stockholders' equity increased by $890,000.

Question 20

Details about a company's liabilities should be included in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

A bond with a face value of $80,000 and a quoted price of 104 has a selling price of: (Round your final answer to the nearest dollar. )

The carrying value of a bond immediately after the bond was issued was $225,000.The bond price was 96.The face value of the bond was: (Round your final answer to the nearest dollar. )

For operating leases,the lessee obtains the risks and rewards of owning the leased asset.

Because operating leases require the lessee to make rent payments,a liability is created,and it must appear on the lessee's balance sheet.The lease is longer than one year.

Bonds with a 7% stated interest rate were issued when the market rate of interest was 6%.This bond was issued at:

If bonds have been issued at a premium,over the life of the bonds,the:

Bonds that mature on a single date are called .Bonds that mature on multiple dates are called .

Under the effective-interest method of amortization,the bond cash payment on each interest date is calculated by multiplying the:

Bonds that the issuer may pay off at a prearranged price whenever the issuer chooses before the maturity date are:

Operating leases are preferred over finance leases because operating leases that exceed one year do not increase a company's debt ratio.

Callable bonds allow the issuer to pay off the bonds whenever the issuer chooses.

Solderman Company issued $510,000,7%,10-year bonds for $422,800 with a market rate of 9%.The effective interest method of amortization is used and interest is paid annually.The journal entry on the first interest payment date would include a:

If the market interest rate is 6%,a $10,000,7%,5-year bond,that pays interest semiannually would sell at an amount:

Premium on Bonds Payable:

Immediately after the last interest payment,Henry Company converted $3,300,000 of its bonds into 330,000 shares of $10 par value common stock.The unamortized premium on the bonds at the date of the conversion was $890,000.As a result of this conversion:

Details about a company's liabilities should be included in the notes to the financial statements.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 9: Long-Term Liabilities

A bond with a face value of $80,000 and a quoted price of 104 has a selling price of: (Round your final answer to the nearest dollar. )

The carrying value of a bond immediately after the bond was issued was $225,000.The bond price was 96.The face value of the bond was: (Round your final answer to the nearest dollar. )

For operating leases,the lessee obtains the risks and rewards of owning the leased asset.

Because operating leases require the lessee to make rent payments,a liability is created,and it must appear on the lessee's balance sheet.The lease is longer than one year.

Bonds with a 7% stated interest rate were issued when the market rate of interest was 6%.This bond was issued at:

If bonds have been issued at a premium,over the life of the bonds,the:

Bonds that mature on a single date are called ________.Bonds that mature on multiple dates are called ________.

Under the effective-interest method of amortization,the bond cash payment on each interest date is calculated by multiplying the:

Bonds that the issuer may pay off at a prearranged price whenever the issuer chooses before the maturity date are:

Operating leases are preferred over finance leases because operating leases that exceed one year do not increase a company's debt ratio.

Callable bonds allow the issuer to pay off the bonds whenever the issuer chooses.

Solderman Company issued $510,000,7%,10-year bonds for $422,800 with a market rate of 9%.The effective interest method of amortization is used and interest is paid annually.The journal entry on the first interest payment date would include a:

If the market interest rate is 6%,a $10,000,7%,5-year bond,that pays interest semiannually would sell at an amount:

Premium on Bonds Payable:

Immediately after the last interest payment,Henry Company converted $3,300,000 of its bonds into 330,000 shares of $10 par value common stock.The unamortized premium on the bonds at the date of the conversion was $890,000.As a result of this conversion:

Details about a company's liabilities should be included in the notes to the financial statements.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Bonds that mature on a single date are called .Bonds that mature on multiple dates are called .