Question 1

Collateral agreements for a note or bond can:

Accepted Answer

A)  Lower the risk in comparison with unsecured debt.
B)  Increase the risk in comparison with unsecured debt.
C)  Have no effect on risk.
D)  Reduce the issuer's assets.
E)  Increase total cost for the borrower.F) C) and E)
G) C) and D)

Question 2

A company issued 10-year,9% bonds,with a par value of $500,000 when the market rate was 9.5%.The issuer received $484,087 in cash proceeds.Prepare the issuer's journal entry to record the bond issuance.

Accepted Answer

The answer of A company issued 10-year,9% bonds,with a par...

Question 3

A discount on bonds payable:

Accepted Answer

A)  Occurs when a company issues bonds with a contract rate less than the market rate.
B)  Occurs when a company issues bonds with a contract rate more than the market rate.
C)  Increases the Bond Payable account.
D)  Decreases the total bond interest expense.
E)  Is not allowed in many states to protect creditors.F) All of the above
G) None of the above

Question 4

When the contract rate is above the market rate,a bond sells at a discount.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  Debentures.
B)  Discounted notes.
C)  Installment notes.
D)  Indentures.
E)  Investment notes.F) All of the above
G) B) and C)

Question 6

An _______________ is a series of equal payments at equal time intervals.

Accepted Answer

The answer of An _______________ is a series of equal...

Question 7

The carrying (book)value of a bond at the time when it is issued is always equal to its par value.

Accepted Answer

A) True 
 B)False

Question 8

A company calls $150,000 par value of bonds with a carrying value of $147,950.The company calls the bonds at $151,000.Prepare the journal entry to record the retirement of the bonds.

Accepted Answer

The answer of A company calls $150,000 par value of...

Question 9

On January 1,a company issued 10-year,10% bonds payable with a par value of $500,000,and received $442,647 in cash proceeds.The market rate of interest at the date of issuance was 12%.The bonds pay interest semiannually on July 1 and January 1.The issuer uses the straight-line method for amortization.Prepare the issuer's journal entry to record the first semiannual interest payment on July 1.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Cash payment: $500,000 * 10% ...

Question 10

When convertible bonds are converted to a company's stock,the carrying value of the bonds is transferred to equity accounts and no gain or loss is recorded.

Accepted Answer

A) True 
 B)False

Question 11

A company has bonds outstanding with a par value of $100,000.The unamortized premium on these bonds is $2,700.If the company retired these bonds at a call price of 99,the gain or loss on this retirement is:

Accepted Answer

A)  $ 1,000 gain.
B)  $ 1,000 loss.
C)  $ 2,700 loss.
D)  $ 2,700 gain.
E)  $ 3,700 gain.F) All of the above
G) C) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Match each of the following terms with the appropriate definitions.

-Process cost summary

Accepted Answer

A)  Costing system to determine the cost of producing each job or job lot.
B)  Document that summarizes the materials a department uses during a reporting period; replaces materials requisition.
C)  Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output.
D)  A manufacturing system that contains features of both process and job order systems.
E)  Number of units that would be completed if all effort during a period had been applied to units that were started and finished.F) System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.G) Process of products in a continuous flow of steps.H) A) and E)
I) C) and G)

Question 14

When the contract rate on a bond issue is less than the market rate,the bonds will generally sell at a discount.

Accepted Answer

A) True 
 B)False

Question 15

A company issued 10%,10-year bonds with a par value of $1,000,000 on January 1,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.

Accepted Answer

(1)

6/30/:
Cash payment: $1,000,000 * ...

Question 16

_______________ bonds have specific assets of the issuing company pledged as collateral.

Accepted Answer

The answer of _______________ bonds have specific assets of the...

Question 17

On January 1,a company issues bonds dated January 1 with a par value of $400,000.The bonds mature in 5 years.The contract rate is 7%,and interest is paid semiannually on June 30 and December 31.The market rate is 8% and the bonds are sold for $383,793.The journal entry to record the issuance of the bond is:

Accepted Answer

A)  Debit Cash $400,000; debit Discount on Bonds Payable $16,207; credit Bonds Payable $416,207.
B)  Debit Cash $383,793; debit Discount on Bonds Payable $16,207; credit Bonds Payable $400,000.
C)  Debit Bonds Payable $400,000; debit Interest Expense $16,207; credit Cash $416,207.
D)  Debit Cash $383,793; debit Premium on Bonds Payable $16,207; credit Bonds Payable $400,000.
E)  Debit Cash $383,793; credit Bonds Payable $383,793.F) None of the above
G) A) and B)

Question 18

Match each of the following terms with the appropriate definitions.

-Equivalent units of production

Accepted Answer

A)  Costing system to determine the cost of producing each job or job lot.
B)  Document that summarizes the materials a department uses during a reporting period; replaces materials requisition.
C)  Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output.
D)  A manufacturing system that contains features of both process and job order systems.
E)  Number of units that would be completed if all effort during a period had been applied to units that were started and finished.F) System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit.G) Process of products in a continuous flow of steps.H) E) and G)
I) C) and G)

Question 19

Payments on an installment note normally include the accrued interest expense plus a portion of the amount borrowed.

Accepted Answer

A) True 
 B)False

Question 20

The equal total payments pattern for installment notes consists of changing amounts of interest but constant amounts of principal over the life of the note.

Accepted Answer

A) True 
 B)False

Exam 14: Long-Term Liabilities

Correct Answer
verified

An _______________ is a series of equal payments at equal time intervals.

Correct Answer
verified

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

Correct Answer
verified

_______________ bonds have specific assets of the issuing company pledged as collateral.

Correct Answer
verified

When the contract rate on a bond issue is less than the market rate,the bonds will generally sell at a discount.

Correct Answer
verified

A discount on bonds payable:

Correct Answer
verified

A company calls $150,000 par value of bonds with a carrying value of $147,950.The company calls the bonds at $151,000.Prepare the journal entry to record the retirement of the bonds.

Correct Answer
verified

When the contract rate is above the market rate,a bond sells at a discount.

Correct Answer
verified

Match each of the following terms with the appropriate definitions. -Process cost summary

Correct Answer
verified

The equal total payments pattern for installment notes consists of changing amounts of interest but constant amounts of principal over the life of the note.

Correct Answer
verified

Match each of the following terms with the appropriate definitions. -Equivalent units of production

Correct Answer
verified

A company has bonds outstanding with a par value of $100,000.The unamortized premium on these bonds is $2,700.If the company retired these bonds at a call price of 99,the gain or loss on this retirement is:

Correct Answer
verified

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

Correct Answer
verified

The carrying (book)value of a bond at the time when it is issued is always equal to its par value.

Correct Answer
verified

When convertible bonds are converted to a company's stock,the carrying value of the bonds is transferred to equity accounts and no gain or loss is recorded.

Correct Answer
verified

Correct Answer
verified
(1)
6/30/:
Cash payment: $1,000,000 * ...
View Answer

Payments on an installment note normally include the accrued interest expense plus a portion of the amount borrowed.

Correct Answer
verified

Correct Answer
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Cash payment: $500,000 * 10% ...
View Answer

A company issued 10-year,9% bonds,with a par value of $500,000 when the market rate was 9.5%.The issuer received $484,087 in cash proceeds.Prepare the issuer's journal entry to record the bond issuance.

Correct Answer
verified

Collateral agreements for a note or bond can:

Correct Answer
verified

Exam 14: Long-Term Liabilities

Correct AnswerverifiedShow Answer

An _______________ is a series of equal payments at equal time intervals.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

_______________ bonds have specific assets of the issuing company pledged as collateral.

Correct AnswerverifiedShow Answer

When the contract rate on a bond issue is less than the market rate,the bonds will generally sell at a discount.

Correct AnswerverifiedShow Answer

A discount on bonds payable:

Correct AnswerverifiedShow Answer

A company calls $150,000 par value of bonds with a carrying value of $147,950.The company calls the bonds at $151,000.Prepare the journal entry to record the retirement of the bonds.

Correct AnswerverifiedShow Answer

When the contract rate is above the market rate,a bond sells at a discount.

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions. -Process cost summary

Correct AnswerverifiedShow Answer

The equal total payments pattern for installment notes consists of changing amounts of interest but constant amounts of principal over the life of the note.

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions. -Equivalent units of production

Correct AnswerverifiedShow Answer

A company has bonds outstanding with a par value of $100,000.The unamortized premium on these bonds is $2,700.If the company retired these bonds at a call price of 99,the gain or loss on this retirement is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The carrying (book)value of a bond at the time when it is issued is always equal to its par value.

Correct AnswerverifiedShow Answer

When convertible bonds are converted to a company's stock,the carrying value of the bonds is transferred to equity accounts and no gain or loss is recorded.

Correct AnswerverifiedShow Answer

Correct Answerverified(1) 6/30/:Cash payment: $1,000,000 * ...View AnswerShow Answer

Payments on an installment note normally include the accrued interest expense plus a portion of the amount borrowed.

Correct AnswerverifiedShow Answer

Correct Answerverified Cash payment: $500,000 * 10% ...View AnswerShow Answer

A company issued 10-year,9% bonds,with a par value of $500,000 when the market rate was 9.5%.The issuer received $484,087 in cash proceeds.Prepare the issuer's journal entry to record the bond issuance.

Correct AnswerverifiedShow Answer

Collateral agreements for a note or bond can:

Correct AnswerverifiedShow Answer

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Correct Answer
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(1)
6/30/:
Cash payment: $1,000,000 * ...
View Answer

Correct Answer
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Correct Answer
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Cash payment: $500,000 * 10% ...
View Answer

Correct Answer
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Correct Answer
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