FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Long-Term Liabilities

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:

A) $3,386.30
B) $3,500.00
C) $3,613.70
D) $6,633.70
E) $7,000.00

F) B) and D)
G) All of the above

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

There are two common payment patterns for installment notes: (1) accrued interest plus equal principal payments and (2) equal payments.

A) True
B) False

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

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

The balance of a note payable at any point in time equals its face value minus any unamortized _______________ or plus any unamortized _______________.

What is an annuity?

A bond listed at 103 on a stock exchange is selling at 103% of its par value.

______________ bonds are bonds that are scheduled for maturity on one specified date.

Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as:

A company issued 9.2%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The market interest rate on the issue date was 10% and the issuer received $95,016 cash for the bonds. The issuer uses the effective interest method for amortization. On the first semiannual interest date, what amount of discount should issuer amortize?

Explain how to record the issuance and sale of a bond between interest payment dates.

An advantage of bond financing is that issuing bonds does not affect owner control.

A bond sells at a discount when the:

A company issued 18-year, 6% bonds with a par value of $750,000. The company received $761,736 cash for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:

A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1, 2010, at a selling price of $885,295, to yield the buyers a 12% return. The company uses the effective interest amortization method. Interest is paid semiannually each June 30 and December 31. (1) Prepare an amortization table for the first two payment periods using the format shown below: (2) Prepare the journal entry to record the first semiannual interest payment.

What methods can a company use to retire its bonds?

The market value of a bond is equal to:

___________________ bonds have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity.

A company has bonds outstanding with a par value of $400,000. The unamortized premium on these bonds is $2,000. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement?

Identify and explain the different types and payment patterns of notes payable.

Bonds that mature at different dates and end up with the total principal repaid gradually over a number of periods are referred to as: