Question 1

Bondholders are creditors of the issuing corporation.

Accepted Answer

A) True 
 B)False

Question 2

Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

Accepted Answer

A)  $1,200 loss 
B)  $1,200 gain 
C)  $17,000 loss 
D)  $17,000 gain 
A)  $1,200 loss 
B)  $1,200 gain 
C)  $17,000 loss 
D)  $17,000 gain

Question 3

When a corporation issues bonds, it executes a contract with the bondholders, known as a bond debenture.

Accepted Answer

A) True 
 B)False

Question 4

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

Accepted Answer

A)  $ 321,970 
B)  $1,000,000 
C)  $943,494 
D)  $621,524 
A)  $ 321,970 
B)  $1,000,000 
C)  $943,494 
D)  $621,524

Question 5

Jenson Co., is considering the following alternative plans for financing their company:
   Income tax is estimated at 40% of income.
Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

Accepted Answer

The answer of Jenson Co., is considering the following alternative...

Question 6

The face value of a term bond is payable at a single specific date in the future.

Accepted Answer

A) True 
 B)False

Question 7

An equal stream of periodic payments is called an annuity.

Accepted Answer

A) True 
 B)False

Question 8

Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400 every 6 months.

Accepted Answer

A) True 
 B)False

Question 9

A corporation often issues callable bonds to protect itself against significant declines in future interest rates.

Accepted Answer

A) True 
 B)False

Question 10

A bond indenture is

Accepted Answer

A)  a contract between the corporation issuing the bonds and the underwriters selling the bonds 
B)  the amount due at the maturity date of the bonds 
C)  a contract between the corporation issuing the bonds and the bond trustee, who is acting on behalf of the bondholders. 
D)  the amount for which the corporation can buy back the bonds prior to the maturity date 
A)  a contract between the corporation issuing the bonds and the underwriters selling the bonds 
B)  the amount due at the maturity date of the bonds 
C)  a contract between the corporation issuing the bonds and the bond trustee, who is acting on behalf of the bondholders. 
D)  the amount for which the corporation can buy back the bonds prior to the maturity date

Question 11

Debenture bonds are

Accepted Answer

A)  bonds secured by specific assets of the issuing corporation 
B)  bonds that have a single maturity date 
C)  issued only by the federal government 
D)  issued on the general credit of the corporation and do not pledge specific assets as collateral. 
A)  bonds secured by specific assets of the issuing corporation 
B)  bonds that have a single maturity date 
C)  issued only by the federal government 
D)  issued on the general credit of the corporation and do not pledge specific assets as collateral.

Question 12

A $300,000 bond was redeemed at 103 when the carrying value of the bond was $315,000. The entry to record the redemption would include a

Accepted Answer

A)  loss on bond redemption of $6,000. 
B)  gain on bond redemption of $6,000. 
C)  gain on bond redemption of $9,000. 
D)  loss on bond redemption of $9,000. 
A)  loss on bond redemption of $6,000. 
B)  gain on bond redemption of $6,000. 
C)  gain on bond redemption of $9,000. 
D)  loss on bond redemption of $9,000.

Question 13

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000. Journalize the redemption of the bonds.

Accepted Answer

The answer of A $500,000 bond issue on which there...

Question 14

If the amount of a bond premium on an issued 11%, 4-year, $100,000 bond is $12,928, the semiannual straight-line amortization of the premium is $1,416.

Accepted Answer

A) True 
 B)False

Question 15

On August 1, Clayton Co. issued $1,300,000 of 20-year, 9% bonds, dated August 1, for $1,225,000. Interest is payable semiannually on February 1 and August 1. Present the entries to record the following transactions for the current year:

Accepted Answer

The answer of On August 1, Clayton Co. issued $1,300,000...

Question 16

The carrying amount of the bonds is defined as the face value of the bonds plus any unamortized discount or less any unamortized premium.

Accepted Answer

A) True 
 B)False

Question 17

A bond is usually divided into a number of individual bonds of $500 each.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not an advantage of issuing bonds instead of common stock?

Accepted Answer

A)  Tax savings result. 
B)  Income to common shareholders may increase. 
C)  Earnings per share on common stock may be lower. 
D)  Stockholder control is not affected. 
A)  Tax savings result. 
B)  Income to common shareholders may increase. 
C)  Earnings per share on common stock may be lower. 
D)  Stockholder control is not affected.

Question 19

On January 1, 2010, the Baker Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2014. Baker records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2010, is

Accepted Answer

A)  $4,000 
B)  $4,200 
C)  $5,400 
D)  $5,800 
A)  $4,000 
B)  $4,200 
C)  $5,400 
D)  $5,800

Question 20

A corporation issues for cash $15,000,000 of 8%, 30-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

Accepted Answer

A)  The amount of annual interest paid to bondholders remains the same over the life of the bonds. 
B)  The amount of annual interest expense decreases as the bonds approach maturity. 
C)  The amount of annual interest paid to bondholders increases over the 30-year life of the bonds. 
D)  The carrying amount decreases from its amount at issuance date to $15,000,000 at maturity. 
A)  The amount of annual interest paid to bondholders remains the same over the life of the bonds. 
B)  The amount of annual interest expense decreases as the bonds approach maturity. 
C)  The amount of annual interest paid to bondholders increases over the 30-year life of the bonds. 
D)  The carrying amount decreases from its amount at issuance date to $15,000,000 at maturity.

Bondholders are creditors of the issuing corporation.

Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

When a corporation issues bonds, it executes a contract with the bondholders, known as a bond debenture.

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

Jenson Co., is considering the following alternative plans for financing their company: Income tax is estimated at 40% of income. Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

The face value of a term bond is payable at a single specific date in the future.

An equal stream of periodic payments is called an annuity.

Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400 every 6 months.

A corporation often issues callable bonds to protect itself against significant declines in future interest rates.

A bond indenture is

Debenture bonds are

A $300,000 bond was redeemed at 103 when the carrying value of the bond was $315,000. The entry to record the redemption would include a

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000. Journalize the redemption of the bonds.

If the amount of a bond premium on an issued 11%, 4-year, $100,000 bond is $12,928, the semiannual straight-line amortization of the premium is $1,416.

On August 1, Clayton Co. issued $1,300,000 of 20-year, 9% bonds, dated August 1, for $1,225,000. Interest is payable semiannually on February 1 and August 1. Present the entries to record the following transactions for the current year:

The carrying amount of the bonds is defined as the face value of the bonds plus any unamortized discount or less any unamortized premium.

A bond is usually divided into a number of individual bonds of $500 each.

Which of the following is not an advantage of issuing bonds instead of common stock?

A corporation issues for cash $15,000,000 of 8%, 30-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 12: Long-Term Liabilities: Bonds and Notes

Bondholders are creditors of the issuing corporation.

Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

When a corporation issues bonds, it executes a contract with the bondholders, known as a bond debenture.

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

Jenson Co., is considering the following alternative plans for financing their company: Income tax is estimated at 40% of income. Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.

The face value of a term bond is payable at a single specific date in the future.

An equal stream of periodic payments is called an annuity.

Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400 every 6 months.

A corporation often issues callable bonds to protect itself against significant declines in future interest rates.

A bond indenture is

Debenture bonds are

A $300,000 bond was redeemed at 103 when the carrying value of the bond was $315,000. The entry to record the redemption would include a

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000. Journalize the redemption of the bonds.

If the amount of a bond premium on an issued 11%, 4-year, $100,000 bond is $12,928, the semiannual straight-line amortization of the premium is $1,416.

On August 1, Clayton Co. issued $1,300,000 of 20-year, 9% bonds, dated August 1, for $1,225,000. Interest is payable semiannually on February 1 and August 1. Present the entries to record the following transactions for the current year:

The carrying amount of the bonds is defined as the face value of the bonds plus any unamortized discount or less any unamortized premium.

A bond is usually divided into a number of individual bonds of $500 each.

Which of the following is not an advantage of issuing bonds instead of common stock?

A corporation issues for cash $15,000,000 of 8%, 30-year bonds, interest payable annually, at a time when the market rate of interest is 9%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

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