Question 1

Tab Skates Ltd issued $100,000 worth of 5-year,7% bonds and received proceeds of $96,909.The total bond discount would be $10,091.

Accepted Answer

A) True 
 B)False

Question 2

Toopy Corp issues $650,000,9%,10-year bonds.The bonds trade at 105.5.The total amount of interest to be paid to the bondholders for the semiannual interest payments,assuming the effective interest method is used,is

Accepted Answer

A)  $58,500. 
B)  $63,750. 
C)  $68,575. 
D)  $585,000. 
E)  $516,425. 
A)  $58,500. 
B)  $63,750. 
C)  $68,575. 
D)  $585,000. 
E)  $516,425.

Question 3

The _______________ method allocates bond interest expense over the life of the bonds in a way that yields a constant rate of interest.

Accepted Answer

The answer of The _______________ method allocates bond interest expense...

Question 4

A note payable:

Accepted Answer

A)  Is typically a transaction with a single lender. 
B)  Is initially measured and recorded at its selling price. 
C)  Has annual interest expense calculated by multiplying the interest rate on the note by the beginning of the period carrying value. 
D)  Can be repaid as a lump sum. 
E)  All of these answers are correct. 
A)  Is typically a transaction with a single lender. 
B)  Is initially measured and recorded at its selling price. 
C)  Has annual interest expense calculated by multiplying the interest rate on the note by the beginning of the period carrying value. 
D)  Can be repaid as a lump sum. 
E)  All of these answers are correct.

Question 5

Bonds that give the issuer an option of retiring them before they mature are known as:

Accepted Answer

A)  Debentures. 
B)  Callable bonds. 
C)  Convertible bonds. 
D)  Registered bonds. 
E)  Serial bonds. 
A)  Debentures. 
B)  Callable bonds. 
C)  Convertible bonds. 
D)  Registered bonds. 
E)  Serial bonds.

Question 6

If a bond is issued at a premium,interest expense will decrease over the term of the bond.

Accepted Answer

A) True 
 B)False

Question 7

Two common ways for the issuing corporation to retire bonds before maturity are to (1)exercise a convertible option or (2)purchase them on the open market.

Accepted Answer

A) True 
 B)False

Question 8

For a note requiring equal payments,each payment will consist of decreasing amounts of principal and increasing amounts of interest.

Accepted Answer

A) True 
 B)False

Question 9

A bondholder who owns a $1,000,10%,10-year bond has the right to:

Accepted Answer

A)  Receive dividends. 
B)  Receive $10 per year until maturity. 
C)  Vote. 
D)  Receive $1,000 at maturity. 
E)  None of these answers is correct. 
A)  Receive dividends. 
B)  Receive $10 per year until maturity. 
C)  Vote. 
D)  Receive $1,000 at maturity. 
E)  None of these answers is correct.

Question 10

If a bond's interest period does not coincide with the issuing corporation's accounting period,an adjusting entry is necessary to recognize bond interest expense accruing since the most recent interest payment.

Accepted Answer

A) True 
 B)False

Question 11

Cheryl Inc issued $100,000,8%,5-year bonds.The current market rate was 7.5%.Cheryl received $101,136.80 for the bonds.Using the effective interest method of amortizing bond premium or discount,the amount of interest expense for the first semiannual payment was:

Accepted Answer

A)  $3,500.00. 
B)  $3,136.32. 
C)  $3,386,32. 
D)  $3,792.63. 
E)  $4,250.00. 
A)  $3,500.00. 
B)  $3,136.32. 
C)  $3,386,32. 
D)  $3,792.63. 
E)  $4,250.00.

Question 12

Discuss the journal entries required to record the issuance of bonds and the payment of bond interest.

Accepted Answer

The journal entry format to record bond

Question 13

On December 31,2015,when the market rate was 8%,Bones Corp issued $500,000,10%,5-year bonds.Interest is payable semiannually on June 30 and December 31.The corporation uses the effective interest method of amortizing bond premiums or discounts.   Prepare an amortization schedule for the first five payment periods using the format shown below.Round all amounts to the nearest whole dollar.

Accepted Answer

The answer of On December 31,2015,when the market rate was...

Question 14

A bond traded at 102½ means that:

Accepted Answer

A)  The bond pays 2.5% interest. 
B)  The bonds were issued at $1,025 each. 
C)  The market rate of interest is 2.5%. 
D)  The bond is currently traded at $1,025 per $1,000 bond. 
E)  None of these answers is correct. 
A)  The bond pays 2.5% interest. 
B)  The bonds were issued at $1,025 each. 
C)  The market rate of interest is 2.5%. 
D)  The bond is currently traded at $1,025 per $1,000 bond. 
E)  None of these answers is correct.

Question 15

Majeau Tri Ltd bought display racks with a fair market value of $150,000.The corporation signed a 3-year interest-bearing note at 8%.The entry to record the transaction would include:

Accepted Answer

A)  A debit to Notes Payable for $150,000. 
B)  A debit to Interest Expense for $12,000. 
C)  A credit to Notes Payable for $150,000. 
D)  A credit to Interest Payable for $400. 
E)  A credit to Notes Payable for $39,692. 
A)  A debit to Notes Payable for $150,000. 
B)  A debit to Interest Expense for $12,000. 
C)  A credit to Notes Payable for $150,000. 
D)  A credit to Interest Payable for $400. 
E)  A credit to Notes Payable for $39,692.

Question 16

For a note requiring equal payments,each payment will consist of increasing amounts of principal and decreasing amounts of interest.

Accepted Answer

A) True 
 B)False

Question 17

Discount on Bonds Payable is a contra liability account.

Accepted Answer

A) True 
 B)False

Question 18

Debentures have specific assets of the issuing corporation pledged as collateral.

Accepted Answer

A) True 
 B)False

Question 19

Promissory notes that require the borrower to make a series of periodic payments consisting of interest and principal are:

Accepted Answer

A)  Debentures. 
B)  Simple notes. 
C)  Installment notes. 
D)  Indentures. 
E)  Investment notes. 
A)  Debentures. 
B)  Simple notes. 
C)  Installment notes. 
D)  Indentures. 
E)  Investment notes.

Question 20

Any discount is added to the par value of bonds to produce the carrying value of bonds payable.

Accepted Answer

A) True 
 B)False

Tab Skates Ltd issued $100,000 worth of 5-year,7% bonds and received proceeds of $96,909.The total bond discount would be $10,091.

Toopy Corp issues $650,000,9%,10-year bonds.The bonds trade at 105.5.The total amount of interest to be paid to the bondholders for the semiannual interest payments,assuming the effective interest method is used,is

The _______________ method allocates bond interest expense over the life of the bonds in a way that yields a constant rate of interest.

A note payable:

Bonds that give the issuer an option of retiring them before they mature are known as:

If a bond is issued at a premium,interest expense will decrease over the term of the bond.

Two common ways for the issuing corporation to retire bonds before maturity are to (1)exercise a convertible option or (2)purchase them on the open market.

For a note requiring equal payments,each payment will consist of decreasing amounts of principal and increasing amounts of interest.

A bondholder who owns a $1,000,10%,10-year bond has the right to:

If a bond's interest period does not coincide with the issuing corporation's accounting period,an adjusting entry is necessary to recognize bond interest expense accruing since the most recent interest payment.

Cheryl Inc issued $100,000,8%,5-year bonds.The current market rate was 7.5%.Cheryl received $101,136.80 for the bonds.Using the effective interest method of amortizing bond premium or discount,the amount of interest expense for the first semiannual payment was:

Discuss the journal entries required to record the issuance of bonds and the payment of bond interest.

A bond traded at 102½ means that:

Majeau Tri Ltd bought display racks with a fair market value of $150,000.The corporation signed a 3-year interest-bearing note at 8%.The entry to record the transaction would include:

For a note requiring equal payments,each payment will consist of increasing amounts of principal and decreasing amounts of interest.

Discount on Bonds Payable is a contra liability account.

Debentures have specific assets of the issuing corporation pledged as collateral.

Promissory notes that require the borrower to make a series of periodic payments consisting of interest and principal are:

Any discount is added to the par value of bonds to produce the carrying value of bonds payable.

Property,plant and Equipment,and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income,earnings Per Share,and Retained Earnings

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

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Exam 15: Bonds and Long-Term Notes Payable

Tab Skates Ltd issued $100,000 worth of 5-year,7% bonds and received proceeds of $96,909.The total bond discount would be $10,091.

Toopy Corp issues $650,000,9%,10-year bonds.The bonds trade at 105.5.The total amount of interest to be paid to the bondholders for the semiannual interest payments,assuming the effective interest method is used,is

The _______________ method allocates bond interest expense over the life of the bonds in a way that yields a constant rate of interest.

A note payable:

Bonds that give the issuer an option of retiring them before they mature are known as:

If a bond is issued at a premium,interest expense will decrease over the term of the bond.

Two common ways for the issuing corporation to retire bonds before maturity are to (1)exercise a convertible option or (2)purchase them on the open market.

For a note requiring equal payments,each payment will consist of decreasing amounts of principal and increasing amounts of interest.

A bondholder who owns a $1,000,10%,10-year bond has the right to:

If a bond's interest period does not coincide with the issuing corporation's accounting period,an adjusting entry is necessary to recognize bond interest expense accruing since the most recent interest payment.

Cheryl Inc issued $100,000,8%,5-year bonds.The current market rate was 7.5%.Cheryl received $101,136.80 for the bonds.Using the effective interest method of amortizing bond premium or discount,the amount of interest expense for the first semiannual payment was:

Discuss the journal entries required to record the issuance of bonds and the payment of bond interest.

A bond traded at 102½ means that:

Majeau Tri Ltd bought display racks with a fair market value of $150,000.The corporation signed a 3-year interest-bearing note at 8%.The entry to record the transaction would include:

For a note requiring equal payments,each payment will consist of increasing amounts of principal and decreasing amounts of interest.

Discount on Bonds Payable is a contra liability account.

Debentures have specific assets of the issuing corporation pledged as collateral.

Promissory notes that require the borrower to make a series of periodic payments consisting of interest and principal are:

Any discount is added to the par value of bonds to produce the carrying value of bonds payable.

Property,plant and Equipment,and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income,earnings Per Share,and Retained Earnings

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters