Question 1

A premium bond's ________ decreases over time until it reaches face value.

Accepted Answer

The answer of A premium bond's ________ decreases over time...

Question 2

When the maturities of a bond issue are spread over a several dates,the bonds are called:

Accepted Answer

A)  term bonds.
B)  bearer bonds.
C)  debenture bonds.
D)  serial bonds.E) None of the above
F) C) and D)

Question 3

A bond sinking fund is a:

Accepted Answer

A)  short-term investment.
B)  long-term investment.
C)  current liability.
D)  long-term liability.E) None of the above
F) All of the above

Question 4

The carrying value for bonds sold at a discount:

Accepted Answer

A)  equals face value at all times.
B)  increases as time passes until it matures at face value.
C)  decreases as time passes until it matures at face value.
D)  None of these answers are correct.E) B) and C)
F) C) and D)

Question 5

On January 1,20XX,Edward Company issued $200,000,10-year,8% bonds with semiannual interest payments on June 30 and December 31.Record the 20XX journal entries.

Accepted Answer

The answer of On January 1,20XX,Edward Company issued $200,000,10-year,8% bonds...

Question 6

A $1,000 bond quoted at 104 would sell for:

Accepted Answer

A)  $1,104.
B)  $1,000.
C)  $104.
D)  $1,040.E) C) and D)
F) None of the above

Question 7

What is the purpose of a bond sinking fund?

Accepted Answer

The purpose of a bond sinking fund is to...

Question 8

Using the following accounts:
[1]Cash
[2]Sinking fund
[3]Equipment
[4]Building
[5]Land
[6]Accounts payable
[7]Notes payable
[8]Bond payable
[9]Bond interest expense payable
[10]Premium on bonds payable
[11]Discount on bonds payable
[12]Common stock
[13]Retained earnings
[14]Sinking fund earned
[15]Bond interest expense
[16]Gain on retirement
[17]Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
-Retired bonds plus interest previously accrued when the retirement value was beneath the cost of retirement,cash was paid.
Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accepted Answer

Debit 8 & ...

Question 9

When selling bonds at a premium,the premium received effectively:

Accepted Answer

A)  reduces the cost of borrowing.
B)  increases the cost of borrowing.
C)  does not affect the cost of borrowing.
D)  reduces the amount of cash received when bonds are sold.E) A) and D)
F) None of the above

Question 10

Bond Interest Payable is reported as a:

Accepted Answer

A)  current liability on the balance sheet.
B)  current liability on the income statement.
C)  contra-liability on the balance sheet.
D)  contra-liability on the income statement.E) A) and B)
F) All of the above A

Question 11

On October 1,Allan Company issued 8%,10-year,$300,000 bonds at 100.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

Accepted Answer

A)  $0.
B)  $24,000.
C)  $12,000.
D)  $6,000.E) A) and B)
F) None of the above

Question 12

On October 1,Allan Company issued 8%,10-year,$300,000 bonds at 105.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

Accepted Answer

A)  $0.
B)  $24,000.
C)  $12,000.
D)  $6,000.E) A) and B)
F) A) and C)

Question 13

The carrying value of bonds is calculated by:

Accepted Answer

A)  subtracting the Premium on Bonds Payable account balance from the Bonds Payable account balance.
B)  adding the Premium on Bonds Payable account balance to the Bonds Payable account balance.
C)  adding the Discount on Bonds Payable account balance to the Bonds Payable account balance.
D)  adding the Bonds Payable account balance to the Bond Interest Payable account balance.E) All of the above
F) B) and C)

Question 14

Using the following accounts:
[1]Cash
[2]Sinking fund
[3]Equipment
[4]Building
[5]Land
[6]Accounts payable
[7]Notes payable
[8]Bond payable
[9]Bond interest expense payable
[10]Premium on bonds payable
[11]Discount on bonds payable
[12]Common stock
[13]Retained earnings
[14]Sinking fund earned
[15]Bond interest expense
[16]Gain on retirement
[17]Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
-Retired bonds plus interest previously accrued when the retirement value was above the cost of retirement,cash was paid.
Debit ________ & ________ & ________ Credit ________ & ________ & ________

Accepted Answer

Debit 8 & 9,Credit 1 & 15

Question 15

Bailey Corporation has decided to issue bonds pledging specific assets.What type of bonds is it offering?

Accepted Answer

A)  Secured bonds
B)  Debenture bonds
C)  Convertible bonds
D)  Serial bondsE) A) and B)
F) B) and C)

Question 16

If bonds are sold between interest payment dates,the amount of cash the issuer receives is:

Accepted Answer

A)  more than the market value of the bonds.
B)  less than the market value of the bonds.
C)  equal to the market value of the bonds.
D)  equal to the face value of the bonds.E) A) and C)
F) C) and D) A

Question 17

On October 1,Indiana Company issued $10,000,8%,5-year bonds at 102.What is the adjusting entry on December 31 using straight-line method?

Accepted Answer

A)     Bond Interest Expense 800 Bond Interest Payable 800\begin{array} { | c | c | } \hline 	ext { Bond Interest Expense } & 800 \\hline 	ext { Bond Interest Payable } &\quad\quad\quad\quad 800 \\hline\end{array} Bond Interest Expense  Bond Interest Payable ​800800​​ 
B)     Bond Interest Expense 200 Bond Interest Payable 200\begin{array} { | c | l | } \hline 	ext { Bond Interest Expense } & 200 \\hline 	ext { Bond Interest Payable } &\quad\quad\quad 200 \\hline\end{array} Bond Interest Expense  Bond Interest Payable ​200200​​ 
C)     Bond Interest Expense 190 Premium on Bonds Payable 10 Bond Interest Payable 200\begin{array} { | c | l | } \hline 	ext { Bond Interest Expense } & 190 \\hline 	ext { Premium on Bonds Payable } & 10 \\hline 	ext { Bond Interest Payable } &\quad\quad\quad200 \\hline\end{array} Bond Interest Expense  Premium on Bonds Payable  Bond Interest Payable ​19010200​​ 
D)     Bond Interest Expense 210 Premium on Bonds Payable 10 Bond Interest Payable 200\begin{array} { | r | r | } \hline 	ext { Bond Interest Expense } & 210 \\hline 	ext { Premium on Bonds Payable } &\quad\quad\quad 10 \\hline 	ext { Bond Interest Payable } & 200 \\hline\end{array} Bond Interest Expense  Premium on Bonds Payable  Bond Interest Payable ​21010200​​E) B) and C)
F) A) and B)

Question 18

A special type of long-term interest-bearing note payable issued by a corporation to raise capital is called a:

Accepted Answer

A)  short-term note payable.
B)  bond payable.
C)  stock issue.
D)  treasury stock issue.E) None of the above
F) A) and C)

Question 19

The formal written agreement for issuing bonds is called a(n)________.

Accepted Answer

The answer of The formal written agreement for issuing bonds...

Question 20

Moab Corporation sells $500,000 of 7%,20-year bonds for 98 on January 1.Interest is paid on January 1 and July 1.Straight-line amortization is used.What is the amount of the discount at issuance?

Accepted Answer

A)  $10,000
B)  $ 5,000
C)  $35,000
D)  $17,500E) A) and D)
F) All of the above

Exam 20: Corporations and Bonds Payable

A premium bond's ________ decreases over time until it reaches face value.

Correct Answer
verified

When the maturities of a bond issue are spread over a several dates,the bonds are called:

Correct Answer
verified

A bond sinking fund is a:

Correct Answer
verified

The carrying value for bonds sold at a discount:

Correct Answer
verified

On January 1,20XX,Edward Company issued $200,000,10-year,8% bonds with semiannual interest payments on June 30 and December 31.Record the 20XX journal entries.

Correct Answer
verified

A $1,000 bond quoted at 104 would sell for:

Correct Answer
verified

What is the purpose of a bond sinking fund?

Correct Answer
verified
The purpose of a bond sinking fund is to...
View Answer

Correct Answer
verified
Debit 8 & ...
View Answer

When selling bonds at a premium,the premium received effectively:

Correct Answer
verified

Bond Interest Payable is reported as a:

Correct Answer
verified
A

On October 1,Allan Company issued 8%,10-year,$300,000 bonds at 100.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

Correct Answer
verified

On October 1,Allan Company issued 8%,10-year,$300,000 bonds at 105.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

Correct Answer
verified

The carrying value of bonds is calculated by:

Correct Answer
verified

Correct Answer
verified
Debit 8 & 9,Credit 1 & 15

Bailey Corporation has decided to issue bonds pledging specific assets.What type of bonds is it offering?

Correct Answer
verified

If bonds are sold between interest payment dates,the amount of cash the issuer receives is:

Correct Answer
verified
A

On October 1,Indiana Company issued $10,000,8%,5-year bonds at 102.What is the adjusting entry on December 31 using straight-line method?

Correct Answer
verified

A special type of long-term interest-bearing note payable issued by a corporation to raise capital is called a:

Correct Answer
verified

The formal written agreement for issuing bonds is called a(n)________.

Correct Answer
verified

Moab Corporation sells $500,000 of 7%,20-year bonds for 98 on January 1.Interest is paid on January 1 and July 1.Straight-line amortization is used.What is the amount of the discount at issuance?

Correct Answer
verified

Exam 20: Corporations and Bonds Payable

A premium bond's ________ decreases over time until it reaches face value.

Correct AnswerverifiedShow Answer

When the maturities of a bond issue are spread over a several dates,the bonds are called:

Correct AnswerverifiedShow Answer

A bond sinking fund is a:

Correct AnswerverifiedShow Answer

The carrying value for bonds sold at a discount:

Correct AnswerverifiedShow Answer

On January 1,20XX,Edward Company issued $200,000,10-year,8% bonds with semiannual interest payments on June 30 and December 31.Record the 20XX journal entries.

Correct AnswerverifiedShow Answer

A $1,000 bond quoted at 104 would sell for:

Correct AnswerverifiedShow Answer

What is the purpose of a bond sinking fund?

Correct AnswerverifiedThe purpose of a bond sinking fund is to...View AnswerShow Answer

Correct AnswerverifiedDebit 8 & ...View AnswerShow Answer

When selling bonds at a premium,the premium received effectively:

Correct AnswerverifiedShow Answer

Bond Interest Payable is reported as a:

Correct AnswerverifiedA

On October 1,Allan Company issued 8%,10-year,$300,000 bonds at 100.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

Correct AnswerverifiedShow Answer

On October 1,Allan Company issued 8%,10-year,$300,000 bonds at 105.Interest dates are April 1 and October 1.The amount of cash paid out for interest during the current calendar year is:

Correct AnswerverifiedShow Answer

The carrying value of bonds is calculated by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDebit 8 & 9,Credit 1 & 15

Bailey Corporation has decided to issue bonds pledging specific assets.What type of bonds is it offering?

Correct AnswerverifiedShow Answer

If bonds are sold between interest payment dates,the amount of cash the issuer receives is:

Correct AnswerverifiedA

On October 1,Indiana Company issued $10,000,8%,5-year bonds at 102.What is the adjusting entry on December 31 using straight-line method?

Correct AnswerverifiedShow Answer

A special type of long-term interest-bearing note payable issued by a corporation to raise capital is called a:

Correct AnswerverifiedShow Answer

The formal written agreement for issuing bonds is called a(n)________.

Correct AnswerverifiedShow Answer

Moab Corporation sells $500,000 of 7%,20-year bonds for 98 on January 1.Interest is paid on January 1 and July 1.Straight-line amortization is used.What is the amount of the discount at issuance?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The purpose of a bond sinking fund is to...
View Answer

Correct Answer
verified
Debit 8 & ...
View Answer

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Debit 8 & 9,Credit 1 & 15

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified