Exam 11: Long-Term Liabilities

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The present value of a bond is determined by subtracting the discounted value of the payment at maturity from the discounted value of a series of fixed interest payments.

(True/False)

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Question 141

A $50,000 bond issue with a carrying value of $47,000 is called at 102 and retired.The entry to record the retirement of bonds is:

(Multiple Choice)

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Question 142

Plum Corporation issues $400,000 of 7 percent,five-year bonds on January 1,20x5,when the market rate of interest is 8 percent.The bond indenture states that interest is to be paid on January 1 and July 1 of each year.The entry to record the issuance includes

(Multiple Choice)

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Question 143

All of the following are advantages of issuing bonds rather than stock except

(Multiple Choice)

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Question 144

On March 1,20x5,Darby Corporation sold 102 of its 9 percent,$1,000 bonds for a price of 96 plus accrued interest.The accrued interest amounted to $1,000.If a balance sheet were to be prepared at the end of the day,March 1,20x5,the carrying value reported for the bonds payable would be

(Multiple Choice)

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Question 145

A bond with a face value of $1,000 has a current price quote of 89.00.This bond is selling for

(Multiple Choice)

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Question 146

The present value of a bond is always less than the face value of the bond.

(True/False)

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Question 147

If the market interest rate is lower than the face interest rate at the date of issuance,bonds will

(Multiple Choice)

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Question 148

When determining the value of a bond using present value,what are the two components used in the calculation?

(Essay)

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Question 149

When bonds are called for retirement,any excess of the bonds' call price over the bonds' carrying value is reported as a gain on the income statement.

(True/False)

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Question 150

The market interest rate is the rate that an issuer of bonds actually will have to bear and that an investor (purchaser)actually will earn over the bond's life.

(True/False)

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Question 151

When earnings from the investment exceed the interest payments on an investment,negative financial leverage has occurred.

(True/False)

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Question 152

On January 2,20x5,Clair Inc.signed a 9% mortgage payable for $200,000 with equal monthly payments of $2,400.When Clair makes the second payment,how much interest expense will be recorded?

(Multiple Choice)

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Question 153

Piper Company issued ten-year,8 percent bonds payable in 20x5 at a premium.During 20x5,the company's accountant failed to amortize any of the bond premium.The omission of the premium amortization will

(Multiple Choice)

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(81)

Question 154

If a 20-year bond pays interest of 8 percent semiannually,the present value of the bond is calculated based upon 4 percent and 20 periods.

(True/False)

4.8/5

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Question 155

The advantages of financial leverage accrue primarily to

(Multiple Choice)

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Question 156

Russell Corporation issued $224,000 of 12 percent bonds (at face value)one month after the last semi-annual interest date.Which of the following is the entry to record the issuance?

(Multiple Choice)

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Question 157

The effective interest method produces a constant dollar amount of bond interest expense to be reported each interest period.

(True/False)

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Question 158

If Rex Corporation issued ten $1,000 bonds issued at 99.75 on the interest date,the entry to record this transaction is :

(Multiple Choice)

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Question 159

A company has $450,000 in bonds payable with an unamortized discount of $10,500.If two-thirds of the bonds are converted to common stock,the carrying value of the bonds payable will decrease by

(Multiple Choice)

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Question 160

Showing 141 - 160 of 200

Exam 11: Long-Term Liabilities

The present value of a bond is determined by subtracting the discounted value of the payment at maturity from the discounted value of a series of fixed interest payments.

A $50,000 bond issue with a carrying value of $47,000 is called at 102 and retired.The entry to record the retirement of bonds is:

Plum Corporation issues $400,000 of 7 percent,five-year bonds on January 1,20x5,when the market rate of interest is 8 percent.The bond indenture states that interest is to be paid on January 1 and July 1 of each year.The entry to record the issuance includes

All of the following are advantages of issuing bonds rather than stock except

On March 1,20x5,Darby Corporation sold 102 of its 9 percent,$1,000 bonds for a price of 96 plus accrued interest.The accrued interest amounted to $1,000.If a balance sheet were to be prepared at the end of the day,March 1,20x5,the carrying value reported for the bonds payable would be

A bond with a face value of $1,000 has a current price quote of 89.00.This bond is selling for

The present value of a bond is always less than the face value of the bond.

If the market interest rate is lower than the face interest rate at the date of issuance,bonds will

When determining the value of a bond using present value,what are the two components used in the calculation?

When bonds are called for retirement,any excess of the bonds' call price over the bonds' carrying value is reported as a gain on the income statement.

The market interest rate is the rate that an issuer of bonds actually will have to bear and that an investor (purchaser)actually will earn over the bond's life.

When earnings from the investment exceed the interest payments on an investment,negative financial leverage has occurred.

On January 2,20x5,Clair Inc.signed a 9% mortgage payable for $200,000 with equal monthly payments of $2,400.When Clair makes the second payment,how much interest expense will be recorded?

Piper Company issued ten-year,8 percent bonds payable in 20x5 at a premium.During 20x5,the company's accountant failed to amortize any of the bond premium.The omission of the premium amortization will

If a 20-year bond pays interest of 8 percent semiannually,the present value of the bond is calculated based upon 4 percent and 20 periods.

The advantages of financial leverage accrue primarily to

Russell Corporation issued $224,000 of 12 percent bonds (at face value)one month after the last semi-annual interest date.Which of the following is the entry to record the issuance?

The effective interest method produces a constant dollar amount of bond interest expense to be reported each interest period.

If Rex Corporation issued ten $1,000 bonds issued at 99.75 on the interest date,the entry to record this transaction is :

A company has $450,000 in bonds payable with an unamortized discount of $10,500.If two-thirds of the bonds are converted to common stock,the carrying value of the bonds payable will decrease by

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

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