Question 1

Bonds which are backed only by the good faith of the borrower are referred to as:

Accepted Answer

A) junk bonds. 
B) uncertified bonds. 
C) debenture bonds. 
D) callable bonds. 
A) junk bonds. 
B) uncertified bonds. 
C) debenture bonds. 
D) callable bonds.

Question 2

An operating lease transfers title of the leased asset to the lessee at the end of the lease term.

Accepted Answer

A) True 
 B)False

Question 3

Lisle Corporation issued $200,000 of 10% bonds on January 1,2019.The bonds pay interest semiannually on January 1 and July 1.The company has a fiscal year end of May 31.On May 31,2019,the Lisle Corporation will:

Accepted Answer

A) make a journal entry to accrue interest expense from July 1 through December 31. 
B) make a journal entry to accrue interest expense from January 1 through July 1. 
C) make a journal entry to accrue interest expense from January 1 through May 31. 
D) make a journal entry to record cash interest paid on May 31. 
A) make a journal entry to accrue interest expense from July 1 through December 31. 
B) make a journal entry to accrue interest expense from January 1 through July 1. 
C) make a journal entry to accrue interest expense from January 1 through May 31. 
D) make a journal entry to record cash interest paid on May 31.

Question 4

On January 1,2019,Fleming Corporation issued 9%,10-year bonds with a face value of $900,000 at 93.78.Interest is payable semiannually on January 1 and July 1.The effective-interest rate when the bonds were issued was 10%.Any discount or premium is amortized using the effective-interest method.
Required:
Prepare journal entries on:
1.January 1,2019
2.July 1,2019
Omit explanations.

Accepted Answer

The answer of On January 1,2019,Fleming Corporation issued 9%,10-year bonds...

Question 5

Basil Company issued $610,000,8%,5-year bonds for 107,with interest paid annually.Assuming straight-line amortization,what is the carrying value of the bonds after one year?

Accepted Answer

A) $652,700 
B) $610,000 
C) $644,160 
D) $658,800 
A) $652,700 
B) $610,000 
C) $644,160 
D) $658,800

Question 6

After posting the adjusting entries,Bing Corporation has the following account balances (partial listing)at December 31,2019.
   List the items and amounts to be included as long-term liabilities for the balance sheet at December 31,2019.The current portion of the note payable due February 1,2024 is $15,000.

Accepted Answer

The answer of After posting the adjusting entries,Bing Corporation has...

Question 7

On July 1,2019,Bobby's Building Corp.issued $1,000,000 of 11% bonds dated July 1,2019 for $1,062,771.The bonds were sold to yield 10% and pay interest semiannually on July 1 and January 1.Bobby's Building Corp.uses the effective interest method of amortization.The company's fiscal year ends on February 28.
Required:
1.Prepare the journal entry on July 1,2019.
2.Prepare the amortization table for the first two interest periods.
3.Prepare the journal entry on January 1,2020.
4.Prepare the adjusting entry needed on February 28,2020.
Round all amounts to the nearest dollar.Omit explanations for all journal entries.
1.
   2.
   3.
   4.

Accepted Answer

The answer of On July 1,2019,Bobby's Building Corp.issued $1,000,000 of...

Question 8

Fenway Corporation issued a $24,000,10-year,11% bond dated January 1,at 102.The journal entry to record the issuance of the bond will include a:

Accepted Answer

A) debit to Cash for $24,000. 
B) debit to Cash for $24,480. 
C) credit to Bonds Payable for $24,480. 
D) debit to Discount on Bonds Payable for $480. 
A) debit to Cash for $24,000. 
B) debit to Cash for $24,480. 
C) credit to Bonds Payable for $24,480. 
D) debit to Discount on Bonds Payable for $480.

Question 9

The straight-line amortization method is the most theoretically correct way to amortize bond discount and premium because it recognizes the impact that the time value of money has on the interest expense recognized each interest payment period.

Accepted Answer

A) True 
 B)False

Question 10

Over the term of a bond,the amortization of the premium on bonds payable:

Accepted Answer

A) increases the amount of cash paid to bondholders annually. 
B) decreases the amount of cash paid to bondholders annually. 
C) increases interest expense. 
D) decreases interest expense. 
A) increases the amount of cash paid to bondholders annually. 
B) decreases the amount of cash paid to bondholders annually. 
C) increases interest expense. 
D) decreases interest expense.

Question 11

Howser,Inc.reports operating income of $250,000 and interest expense of $20,000.The average number of shares of common stock outstanding during the year was 50,000 shares.The beginning assets balance is $90,000 and ending assets balance is $110,000.What is the times-interest-earned ratio? (Round your final answer to two decimal places. )

Accepted Answer

$250,000 /

Question 12

Under the effective-interest method,if bonds are issued at a discount,the amount of interest expense:

Accepted Answer

A) increases each period as the bonds move towards maturity. 
B) decreases each period as the bonds move towards maturity. 
C) remains the same over the term of the bonds. 
D) is less than the cash interest payment. 
A) increases each period as the bonds move towards maturity. 
B) decreases each period as the bonds move towards maturity. 
C) remains the same over the term of the bonds. 
D) is less than the cash interest payment.

Question 13

On January 1,2019,Anthony Corporation issued $1,000,000 of 6%,5-year bonds at 98,with interest paid annually.Using the straight-line amortization method,what is the carrying value of the bonds one year later on January 1,2020? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar. )

Accepted Answer

A) $980,000 
B) $992,000 
C) $984,000 
D) $1,016,408 
A) $980,000 
B) $992,000 
C) $984,000 
D) $1,016,408

Question 14

The times-interest-earned ratio is calculated by dividing operating income by operating expenses.

Accepted Answer

A) True 
 B)False

Question 15

________ give the issuer the benefit of being able to pay off the bonds whenever it is most favorable to do so.

Accepted Answer

A) Convertible bonds 
B) Convertible notes 
C) Retirement bonds 
D) Callable bonds 
A) Convertible bonds 
B) Convertible notes 
C) Retirement bonds 
D) Callable bonds

Question 16

A ________ may allow the company leasing the asset to own it after a period of time.

Accepted Answer

A) operating lease 
B) convertible lease 
C) finance lease 
D) all of the above 
A) operating lease 
B) convertible lease 
C) finance lease 
D) all of the above

Question 17

The account Premium on Bonds Payable increases the issuer's liabilities.

Accepted Answer

A) True 
 B)False

Question 18

The journal entry to record a semiannual interest payment on a bond payable issued at par:

Accepted Answer

A) debits Interest Expense and credits Bonds Payable. 
B) debits Interest Expense and credits Cash. 
C) debits Cash and credits Interest Payable. 
D) debits Cash and credits Interest Expense. 
A) debits Interest Expense and credits Bonds Payable. 
B) debits Interest Expense and credits Cash. 
C) debits Cash and credits Interest Payable. 
D) debits Cash and credits Interest Expense.

Question 19

Maturities of long-term debt due within one year of the balance sheet date are reported separately from long-term debt.

Accepted Answer

A) True 
 B)False

Question 20

If bonds have been issued at a discount and the effective-interest method is used,the journal entry for payment of bond interest would include:

Accepted Answer

A) a debit to cash. 
B) a debit to discount on bonds payable. 
C) a credit to interest expense. 
D) a debit to interest expense. 
A) a debit to cash. 
B) a debit to discount on bonds payable. 
C) a credit to interest expense. 
D) a debit to interest expense.

Bonds which are backed only by the good faith of the borrower are referred to as:

An operating lease transfers title of the leased asset to the lessee at the end of the lease term.

Lisle Corporation issued $200,000 of 10% bonds on January 1,2019.The bonds pay interest semiannually on January 1 and July 1.The company has a fiscal year end of May 31.On May 31,2019,the Lisle Corporation will:

Basil Company issued $610,000,8%,5-year bonds for 107,with interest paid annually.Assuming straight-line amortization,what is the carrying value of the bonds after one year?

Fenway Corporation issued a $24,000,10-year,11% bond dated January 1,at 102.The journal entry to record the issuance of the bond will include a:

The straight-line amortization method is the most theoretically correct way to amortize bond discount and premium because it recognizes the impact that the time value of money has on the interest expense recognized each interest payment period.

Over the term of a bond,the amortization of the premium on bonds payable:

Under the effective-interest method,if bonds are issued at a discount,the amount of interest expense:

The times-interest-earned ratio is calculated by dividing operating income by operating expenses.

________ give the issuer the benefit of being able to pay off the bonds whenever it is most favorable to do so.

A ________ may allow the company leasing the asset to own it after a period of time.

The account Premium on Bonds Payable increases the issuer's liabilities.

The journal entry to record a semiannual interest payment on a bond payable issued at par:

Maturities of long-term debt due within one year of the balance sheet date are reported separately from long-term debt.

If bonds have been issued at a discount and the effective-interest method is used,the journal entry for payment of bond interest would include:

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

Bonds which are backed only by the good faith of the borrower are referred to as:

An operating lease transfers title of the leased asset to the lessee at the end of the lease term.

Lisle Corporation issued $200,000 of 10% bonds on January 1,2019.The bonds pay interest semiannually on January 1 and July 1.The company has a fiscal year end of May 31.On May 31,2019,the Lisle Corporation will:

Basil Company issued $610,000,8%,5-year bonds for 107,with interest paid annually.Assuming straight-line amortization,what is the carrying value of the bonds after one year?

Fenway Corporation issued a $24,000,10-year,11% bond dated January 1,at 102.The journal entry to record the issuance of the bond will include a:

The straight-line amortization method is the most theoretically correct way to amortize bond discount and premium because it recognizes the impact that the time value of money has on the interest expense recognized each interest payment period.

Over the term of a bond,the amortization of the premium on bonds payable:

Under the effective-interest method,if bonds are issued at a discount,the amount of interest expense:

The times-interest-earned ratio is calculated by dividing operating income by operating expenses.

________ give the issuer the benefit of being able to pay off the bonds whenever it is most favorable to do so.

A ________ may allow the company leasing the asset to own it after a period of time.

The account Premium on Bonds Payable increases the issuer's liabilities.

The journal entry to record a semiannual interest payment on a bond payable issued at par:

Maturities of long-term debt due within one year of the balance sheet date are reported separately from long-term debt.

If bonds have been issued at a discount and the effective-interest method is used,the journal entry for payment of bond interest would include:

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