Question 1

Over the term of the bonds,the balance in the Premium on Bonds Payable account will:

Accepted Answer

A) increase or decrease if the market is unstable. 
B) increase. 
C) decrease. 
D) not change until the bonds mature. 
A) increase or decrease if the market is unstable. 
B) increase. 
C) decrease. 
D) not change until the bonds mature.

Question 2

An airline has the following data about an airplane: Annual lease cost $11,000,000
Lease term: 12 years
Useful life of airplane: 15 years
Fair market value of leased asset: $85 million
Present value of lease payments: $75 million
Bargain purchase option: None
Transfer to lessor at end of lease? Yes
Is this a finance or operating lease? Why?

Accepted Answer

A) This is an operating lease.It fails all the finance lease criteria. 
B) This is an operating lease because it meets at least one of the five operating lease criteria. 
C) This is a finance lease because it meets at least one of the five finance lease criteria. 
D) This is a finance lease because the leased asset cost exceeds $5 million. 
A) This is an operating lease.It fails all the finance lease criteria. 
B) This is an operating lease because it meets at least one of the five operating lease criteria. 
C) This is a finance lease because it meets at least one of the five finance lease criteria. 
D) This is a finance lease because the leased asset cost exceeds $5 million.

Question 3

After posting the adjusting entries,Bing Corporation has the following account balances (partial listing)at December 31,2019.
   Prepare the current liability section of Bing Corporation's 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 4

On January 1,Hanley Corporation issued $2,300,000,10-year,9% bonds at 103.The journal entry to record this transaction would include a:

Accepted Answer

A) credit to Bonds Payable $2,369,000. 
B) debit to Discount on Bonds Payable $69,000. 
C) debit to Cash $2,300,000. 
D) credit to Premium on Bonds Payable $69,000. 
A) credit to Bonds Payable $2,369,000. 
B) debit to Discount on Bonds Payable $69,000. 
C) debit to Cash $2,300,000. 
D) credit to Premium on Bonds Payable $69,000.

Question 5

If the market interest rate is greater than the stated interest rate,the bonds will sell at a discount.

Accepted Answer

A) True 
 B)False

Question 6

David Corporation issued $80,000,5-year bonds at 98 on January 1,2016.On December 31,2020,the bonds matured.The payment of the bonds at maturity would be reported on the statement of cash flows as a cash outflow of:

Accepted Answer

A) $78,400 in the financing activities section. 
B) $78,400 in the investing activities section. 
C) $80,000 in the financing activities section 
D) $80,000 in the investing activities section. 
A) $78,400 in the financing activities section. 
B) $78,400 in the investing activities section. 
C) $80,000 in the financing activities section 
D) $80,000 in the investing activities section.

Question 7

Schmid Corporation issues $450,000,12%,5-year bonds on January 1,2019 for $439,000.Interest is paid semiannually on January 1 and July 1.If Schmid uses the straight-line method of amortization of bond discount,the amount of bond interest expense on July 1,2019 is:

Accepted Answer

A) $25,900. 
B) $27,000. 
C) $28,100. 
D) $55,100. 
A) $25,900. 
B) $27,000. 
C) $28,100. 
D) $55,100.

Question 8

If bonds are issued at a discount,the issuing corporation will pay an amount greater than the face amount of the bonds on the maturity date.

Accepted Answer

A) True 
 B)False

Question 9

On January 1,2018,a bond was issued at a discount.The journal entry to record the semiannual interest payment on July 1,2018 would include a:

Accepted Answer

A) debit to Interest Expense,a credit to Discount on Bonds Payable and a credit to Cash. 
B) debit to Interest Expense,a debit to Discount on Bonds Payable and a credit to Cash. 
C) debit to Interest Expense,a debit to Cash and a credit to Discount on Bonds Payable. 
D) debit to Discount on Bonds Payable and a credit to Cash. 
A) debit to Interest Expense,a credit to Discount on Bonds Payable and a credit to Cash. 
B) debit to Interest Expense,a debit to Discount on Bonds Payable and a credit to Cash. 
C) debit to Interest Expense,a debit to Cash and a credit to Discount on Bonds Payable. 
D) debit to Discount on Bonds Payable and a credit to Cash.

Question 10

If the stated interest rate on a bond is 8% and the market interest rate is 7%,the bond will be issued at a price above the par value of the bond.

Accepted Answer

A) True 
 B)False

Question 11

A leverage ratio of exactly 1.0 would mean that assets exactly equal total liabilities.

Accepted Answer

A) True 
 B)False

Question 12

A $4,000,6% bond is sold at 93.When the bond is issued,the Cash account will be increased by:

Accepted Answer

A) $3,720. 
B) $4,000. 
C) $3,960. 
D) $4,280. 
A) $3,720. 
B) $4,000. 
C) $3,960. 
D) $4,280.

Question 13

Generally accepted accounting principles encourage companies to report the fair value of their long-term debt.

Accepted Answer

A) True 
 B)False

Question 14

Marshall Corporation has $31,000 of bonds outstanding with a carrying value of $39,400.The bonds are converted into 15,500 shares of $1 par value common stock immediately after the last interest payment.The common stock had a market value of $4 per share on the date of conversion.The entry to record the conversion would include a credit to:

Accepted Answer

A) Common Stock for $15,500 and credit to Paid-in Capital in Excess of Par for $8,400. 
B) Bonds Payable for $31,000 and credit to Premium on Bonds Payable for $8,400. 
C) Cash for $39,400. 
D) Common Stock for $15,500 and credit to Paid-in Capital in Excess of Par for $23,900. 
A) Common Stock for $15,500 and credit to Paid-in Capital in Excess of Par for $8,400. 
B) Bonds Payable for $31,000 and credit to Premium on Bonds Payable for $8,400. 
C) Cash for $39,400. 
D) Common Stock for $15,500 and credit to Paid-in Capital in Excess of Par for $23,900.

Question 15

At maturity,the premium on bonds payable will have been amortized to zero,and the bonds carrying value will be the face value of the bond.

Accepted Answer

A) True 
 B)False

Question 16

The interest rate that investors demand for loaning their money is referred to as:

Accepted Answer

A) the coupon rate of interest. 
B) the market rate of interest. 
C) the stated rate of interest. 
D) the debenture rate of interest. 
A) the coupon rate of interest. 
B) the market rate of interest. 
C) the stated rate of interest. 
D) the debenture rate of interest.

Question 17

Premium on bonds payable is a contra account to bonds payable.

Accepted Answer

A) True 
 B)False

Question 18

If bonds are issued at a premium,the carrying value of the bonds will be greater than the face value of the bonds for all interest periods prior to the bond's maturity date.

Accepted Answer

A) True 
 B)False

Question 19

Smith Corporation issues $1,800,000,10-year,6% bonds payable at a price of 95.The journal entry to record the issuance will include a:

Accepted Answer

A) debit to Cash of $1,800,000. 
B) credit to Discount on Bonds Payable for $90,000. 
C) credit to Bonds Payable for $1,710,000. 
D) debit to Cash for $1,710,000. 
A) debit to Cash of $1,800,000. 
B) credit to Discount on Bonds Payable for $90,000. 
C) credit to Bonds Payable for $1,710,000. 
D) debit to Cash for $1,710,000.

Question 20

The journal entry to record the conversion of bonds payable into common stock will include a:

Accepted Answer

A) debit to Bonds Payable and a credit to Common Stock. 
B) debit to Bonds Payable and a credit to Cash. 
C) debit to Cash and a credit to Common Stock. 
D) debit to Cash and a credit to Paid-in Capital in Excess of Par. 
A) debit to Bonds Payable and a credit to Common Stock. 
B) debit to Bonds Payable and a credit to Cash. 
C) debit to Cash and a credit to Common Stock. 
D) debit to Cash and a credit to Paid-in Capital in Excess of Par.

Over the term of the bonds,the balance in the Premium on Bonds Payable account will:

After posting the adjusting entries,Bing Corporation has the following account balances (partial listing)at December 31,2019. Prepare the current liability section of Bing Corporation's balance sheet at December 31,2019.The current portion of the note payable due February 1,2024 is $15,000.

On January 1,Hanley Corporation issued $2,300,000,10-year,9% bonds at 103.The journal entry to record this transaction would include a:

If the market interest rate is greater than the stated interest rate,the bonds will sell at a discount.

David Corporation issued $80,000,5-year bonds at 98 on January 1,2016.On December 31,2020,the bonds matured.The payment of the bonds at maturity would be reported on the statement of cash flows as a cash outflow of:

Schmid Corporation issues $450,000,12%,5-year bonds on January 1,2019 for $439,000.Interest is paid semiannually on January 1 and July 1.If Schmid uses the straight-line method of amortization of bond discount,the amount of bond interest expense on July 1,2019 is:

If bonds are issued at a discount,the issuing corporation will pay an amount greater than the face amount of the bonds on the maturity date.

On January 1,2018,a bond was issued at a discount.The journal entry to record the semiannual interest payment on July 1,2018 would include a:

If the stated interest rate on a bond is 8% and the market interest rate is 7%,the bond will be issued at a price above the par value of the bond.

A leverage ratio of exactly 1.0 would mean that assets exactly equal total liabilities.

A $4,000,6% bond is sold at 93.When the bond is issued,the Cash account will be increased by:

Generally accepted accounting principles encourage companies to report the fair value of their long-term debt.

At maturity,the premium on bonds payable will have been amortized to zero,and the bonds carrying value will be the face value of the bond.

The interest rate that investors demand for loaning their money is referred to as:

Premium on bonds payable is a contra account to bonds payable.

If bonds are issued at a premium,the carrying value of the bonds will be greater than the face value of the bonds for all interest periods prior to the bond's maturity date.

Smith Corporation issues $1,800,000,10-year,6% bonds payable at a price of 95.The journal entry to record the issuance will include a:

The journal entry to record the conversion of bonds payable into common stock will include a:

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

Over the term of the bonds,the balance in the Premium on Bonds Payable account will:

After posting the adjusting entries,Bing Corporation has the following account balances (partial listing)at December 31,2019. Prepare the current liability section of Bing Corporation's balance sheet at December 31,2019.The current portion of the note payable due February 1,2024 is $15,000.

On January 1,Hanley Corporation issued $2,300,000,10-year,9% bonds at 103.The journal entry to record this transaction would include a:

If the market interest rate is greater than the stated interest rate,the bonds will sell at a discount.

David Corporation issued $80,000,5-year bonds at 98 on January 1,2016.On December 31,2020,the bonds matured.The payment of the bonds at maturity would be reported on the statement of cash flows as a cash outflow of:

Schmid Corporation issues $450,000,12%,5-year bonds on January 1,2019 for $439,000.Interest is paid semiannually on January 1 and July 1.If Schmid uses the straight-line method of amortization of bond discount,the amount of bond interest expense on July 1,2019 is:

If bonds are issued at a discount,the issuing corporation will pay an amount greater than the face amount of the bonds on the maturity date.

On January 1,2018,a bond was issued at a discount.The journal entry to record the semiannual interest payment on July 1,2018 would include a:

If the stated interest rate on a bond is 8% and the market interest rate is 7%,the bond will be issued at a price above the par value of the bond.

A leverage ratio of exactly 1.0 would mean that assets exactly equal total liabilities.

A $4,000,6% bond is sold at 93.When the bond is issued,the Cash account will be increased by:

Generally accepted accounting principles encourage companies to report the fair value of their long-term debt.

At maturity,the premium on bonds payable will have been amortized to zero,and the bonds carrying value will be the face value of the bond.

The interest rate that investors demand for loaning their money is referred to as:

Premium on bonds payable is a contra account to bonds payable.

If bonds are issued at a premium,the carrying value of the bonds will be greater than the face value of the bonds for all interest periods prior to the bond's maturity date.

Smith Corporation issues $1,800,000,10-year,6% bonds payable at a price of 95.The journal entry to record the issuance will include a:

The journal entry to record the conversion of bonds payable into common stock will include a:

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