Question 1

Explain the amortization of bond premium.

Accepted Answer

Bond premiums arise when bonds are issue

Question 2

You graphed bond interest expense and interest paid over the life of a bond.You noticed that the interest expense line was below the interest paid line.Identify the statement below that is best described by the graph you drew.

Accepted Answer

A)  The bond was issued at a premium. 
B)  Discounted interest amortization is used. 
C)  The bond was issued at a discount. 
D)  Effective interest amortization is used. 
E)  The bond was issued at par. 
A)  The bond was issued at a premium. 
B)  Discounted interest amortization is used. 
C)  The bond was issued at a discount. 
D)  Effective interest amortization is used. 
E)  The bond was issued at par.

Question 3

Debentures are:

Accepted Answer

A)  Bonds secured by collateral agreements. 
B)  Redeemable bonds. 
C)  Another name for the bond indenture. 
D)  Unsecured bonds. 
E)  Assets used as collateral for bonds. 
A)  Bonds secured by collateral agreements. 
B)  Redeemable bonds. 
C)  Another name for the bond indenture. 
D)  Unsecured bonds. 
E)  Assets used as collateral for bonds.

Question 4

A discount on bonds payable arises when a corporation issues bonds with an issue price less than par value.

Accepted Answer

A) True 
 B)False

Question 5

An installment note is an obligation requiring a series of periodic payments to the lender.

Accepted Answer

A) True 
 B)False

Question 6

Payments on installment notes normally include interest accruing to the date of the payment plus a portion of the principal.

Accepted Answer

A) True 
 B)False

Question 7

The issue price of bonds is estimated by calculating the present value of the bond's cash payments,discounted at the _______________ rate of interest.

Accepted Answer

The answer of The issue price of bonds is estimated...

Question 8

On January 1,2015,SuperBowl Inc signed a two-year,7% $5,000 note payable.The note plus interest is due on December 31,2016.The amount of interest expense to be recorded for 2015 is $375.

Accepted Answer

A) True 
 B)False

Question 9

Roarie Inc issued $200,000,7%,5-year bonds.The current market rate was 7.5%.Roarie received $197,947 for the bonds.Using the effective interest method,the amount of interest expense to be recorded for the first semiannual payment was:

Accepted Answer

A)  $6,500.00. 
B)  $6,673.01. 
C)  $6,705.30. 
D)  $7,423.01. 
E)  $7,000.00. 
A)  $6,500.00. 
B)  $6,673.01. 
C)  $6,705.30. 
D)  $7,423.01. 
E)  $7,000.00.

Question 10

On June 1,2015,when the market rate was 12%,Alarm Inc issued $200,000,12% bonds at par plus accrued interest.The interest on these bonds is payable semiannually on January 1 and July 1.Prepare the journal entry to record the issuance of the bonds.

Accepted Answer

The answer of On June 1,2015,when the market rate was...

Question 11

When bonds are issued,the carrying (book)value is always the par value of the bond.

Accepted Answer

A) True 
 B)False

Question 12

A bond is a written promise to pay an amount identified as the par value of the bond along with interest at a stated annual rate.

Accepted Answer

A) True 
 B)False

Question 13

Explain the conditions required for a lease to qualify as a finance lease.

Accepted Answer

A lease qualifies as a finance lease if

Question 14

Fisher Corporation leases photocopy equipment from Jonah Corporation at $24,000 per year for 3 years beginning January 1,2017.The payments are to be made each December 31,beginning in 2017.The lease agreement meets the criteria for a finance lease.The equipment is to be depreciated straight-line over three years.
Assuming a 6% rate of interest,record the entry on January 1,2017,the adjusting entry for depreciation on December 31,2017,and the entry to record the first lease payment.Round all values to the nearest dollar.

Accepted Answer

@#IMG-DLM& ** 3 N 6 I/Y 24000

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

On December 31,2015,Dale Corporation borrowed $85,000 by signing a 4-year,12% installment note requiring annual payments (on December 31)of accrued interest plus equal amounts of principal.What journal entry would record the first payment on December 31,2016?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
E)    
A) 
  
B) 
  
C) 
  
D) 
  
E)

Explain the amortization of bond premium.

You graphed bond interest expense and interest paid over the life of a bond.You noticed that the interest expense line was below the interest paid line.Identify the statement below that is best described by the graph you drew.

Debentures are:

A discount on bonds payable arises when a corporation issues bonds with an issue price less than par value.

An installment note is an obligation requiring a series of periodic payments to the lender.

Payments on installment notes normally include interest accruing to the date of the payment plus a portion of the principal.

The issue price of bonds is estimated by calculating the present value of the bond's cash payments,discounted at the _______________ rate of interest.

On January 1,2015,SuperBowl Inc signed a two-year,7% $5,000 note payable.The note plus interest is due on December 31,2016.The amount of interest expense to be recorded for 2015 is $375.

Roarie Inc issued $200,000,7%,5-year bonds.The current market rate was 7.5%.Roarie received $197,947 for the bonds.Using the effective interest method,the amount of interest expense to be recorded for the first semiannual payment was:

On June 1,2015,when the market rate was 12%,Alarm Inc issued $200,000,12% bonds at par plus accrued interest.The interest on these bonds is payable semiannually on January 1 and July 1.Prepare the journal entry to record the issuance of the bonds.

When bonds are issued,the carrying (book)value is always the par value of the bond.

A bond is a written promise to pay an amount identified as the par value of the bond along with interest at a stated annual rate.

Explain the conditions required for a lease to qualify as a finance lease.

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

On December 31,2015,Dale Corporation borrowed $85,000 by signing a 4-year,12% installment note requiring annual payments (on December 31)of accrued interest plus equal amounts of principal.What journal entry would record the first payment on December 31,2016?

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

Exam 15: Bonds and Long-Term Notes Payable

Explain the amortization of bond premium.

You graphed bond interest expense and interest paid over the life of a bond.You noticed that the interest expense line was below the interest paid line.Identify the statement below that is best described by the graph you drew.

Debentures are:

A discount on bonds payable arises when a corporation issues bonds with an issue price less than par value.

An installment note is an obligation requiring a series of periodic payments to the lender.

Payments on installment notes normally include interest accruing to the date of the payment plus a portion of the principal.

The issue price of bonds is estimated by calculating the present value of the bond's cash payments,discounted at the _______________ rate of interest.

On January 1,2015,SuperBowl Inc signed a two-year,7% $5,000 note payable.The note plus interest is due on December 31,2016.The amount of interest expense to be recorded for 2015 is $375.

Roarie Inc issued $200,000,7%,5-year bonds.The current market rate was 7.5%.Roarie received $197,947 for the bonds.Using the effective interest method,the amount of interest expense to be recorded for the first semiannual payment was:

On June 1,2015,when the market rate was 12%,Alarm Inc issued $200,000,12% bonds at par plus accrued interest.The interest on these bonds is payable semiannually on January 1 and July 1.Prepare the journal entry to record the issuance of the bonds.

When bonds are issued,the carrying (book)value is always the par value of the bond.

A bond is a written promise to pay an amount identified as the par value of the bond along with interest at a stated annual rate.

Explain the conditions required for a lease to qualify as a finance lease.

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

On December 31,2015,Dale Corporation borrowed $85,000 by signing a 4-year,12% installment note requiring annual payments (on December 31)of accrued interest plus equal amounts of principal.What journal entry would record the first payment on December 31,2016?

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