FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 14: Long-Term Liabilities: Bonds and Notes

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

True/False

Review LaterAdd Note

Review Later

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

A) True
B) False

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Merchant Company issued 10-year bonds on January 1. The 15% bonds have a face value of $100,000 and pay interest every January 1 and July 1. The bonds were sold for $117,205 based on the market interest rate of 12%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of

A) $7,032
B) $7,500
C) $8,790
D) $14,065

E) B) and C)
F) B) and D)

Correct Answer

verified

Show Answer

Question 23

Essay

Review LaterAdd Note

Calculate the total amount of interest expense over the life of the bonds for the following independent situations.​ (a) $100,000 face value, 10%, 10-year bonds issued at 101 (b) $240,000 face value, 5%, five-year bonds issued at 100 (c) $300,000 face value, 9%, six-year bonds issued at 98

If the amount of a bond premium on an issued 11%, four-year, $100,000 bond is $12,928, the annual interest expense is $5,500.

If $1,000,000 of 8% bonds are issued at 102 3/4, the amount of cash received from the sale is

The interest portion of an installment note payment is computed by multiplying the interest rate by the carrying amount of the note at the end of the period.

Callable bonds can be redeemed by the issuing corporation at the fair market price of the bonds.

Luke Corp. issued $2,000,000 of 20-year, 9% callable bonds on July 1, Year 1, with interest payable on June 30 and December 31. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions:

On January 1, Zero Company obtained a $52,000, four-year, 6.5% installment note from Regional Bank. The note requires annual payments consisting of principal and interest of $15,179, beginning on December 31 of the current year. The December 31, Year 1, carrying amount in the amortization table for this installment note will be equal to

When the effective interest method is used, the amortization of the bond premium

Match each description below to the appropriate term (a-g) . ​ -A form of an interest-bearing note

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

If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be

If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is

On January 1, Luther Co. issued a $1,000,000, five-year, 8% installment note payable with payments of $250,456 principal plus interest due on January 1 of each year for the next five years.? (a) Prepare the adjusting journal entry at December 31 to accrue interest for the year.? (b) Show the account (s) and amount (s) and where it (they) will appear on a multi-step income statement prepared onDecember 31.? (c) Show the account (s) and amount (s) and where it (they) will appear on a classified balance sheet prepared onDecember 31.

On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $437,740. Journalize the entry to record the issuance of the bonds.

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

Discount on Bonds Payable is a contra liability account.

Using the following table, what is the present value of $40,000 to be received in five years, if the market rate is 7% compounded annually?

Use the following tables to calculate the present value of a $25,000, 7%, five-year bond that pays $1,750 ($25,000 × 7%) interest annually, if the market rate of interest is 7%Present Value of $1 at Compound Interest​ Present Value of Annuity of $1 at Compound Interest