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Exam 20: Corporations and Bonds Payable

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Question 41

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Mansfield Corporation sells $900,000, 13%, 10-year bonds for 98 on January 1. Interest is paid on January 1 and July 1. Straight-line amortization is used. The entry to record the issuance of the bonds on January 1 is:

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Question 42

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The corporation will repay the principal amount of the bond on the maturity date.

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B) False

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Question 43

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A bond's discount is amortized over the term of the bond.

What is the purpose of a bond sinking fund?

All bonds have accrued interest adjustments on December 31.

On March 1, 20XX, Janes Company issued $200,000, 10-year, 6% bonds at face value. The bonds have semiannual interest payments on June 30 and December 31. Record the 20XX journal entries.

The real or actual rate of interest to the borrowing corporation is called the:

The market rate of interest and the contract rate of interest are always the same for a bond sold at a discount.

On October 1, Indiana Company issued $40,000, 10%, 5-year bonds at 102. What is the adjusting entry on December 31 using the straight-line method?

Bonds that may be redeemed at a certain price level are known as:

When the contract rate of interest on bonds is equal to the market rate of interest, bonds sell at:

Harley Corporation issued a 10%, $800,000 8-year bond at 104. The entry to record the issuance transaction is to:

If a bond is issued at a discount, the effective interest rate is most likely ________ the contract interest rate.

Marlo Corporation issued $400,000 of 14%, 10-year bonds for $380,000. The entry to record the issuance of the bonds includes a:

On January 1, Buy-New Online issued $500,000, 10%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries: a. Issued the bonds. b. Paid first semiannual interest payment. c. Retired the bonds at maturity.

Discount on Bonds Payable is a:

A bond is issued for less than its face value. Which of the following statements most likely would explain why?

The straight-line method for amortization of bonds allocates equal amounts of premium to Bonds Interest Expense each period.

What is the difference between a secured bond and a debenture bond?

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transactions. -Accrued interest on bonds which sold beneath face value. Debit ________ Credit ________ & ________ A)Cash B)Bond Sinking fund C)Equipment D)Building E)Land F)Accounts payable G)Notes payable H)Bond payable I)Bond interest payable J)Premium on bonds payable K)Discount on bonds payable L)Common stock M)Retained earnings N)Sinking fund earned O)Bond interest expense P)Gain on retirement Q)Loss on retirement