Question 1

On January 1, 2014, the Baker Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2023. Baker records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2014, is

Accepted Answer

A)   $5,000
B)   $5,200
C)   $5,800
D)   $5,400E) A) and B)
F) C) and D)

Question 2

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

Accepted Answer

A)   $ 321,970
B)   $1,000,000
C)   $ 943,494
D)   $621,524E) C) and D)
F) None of the above

Question 3

The balance in a bond discount account should be reported on the balance sheet as a deduction from the related bonds payable.

Accepted Answer

A) True 
 B)False

Question 4

Only callable bonds can be purchased by the issuing corporation before maturity.

Accepted Answer

A) True 
 B)False

Question 5

Using the following table, what is the present value of $5,000 to be received 5 years, if the market rate is 10% compounded annually?

Accepted Answer

X = $5,000...

Question 6

On the first day of the fiscal year, Hawthorne Company obtained a $ 88,000, seven-year, 5% installment note from Sea Side Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would record to make the first annual payment due on the note would include:

Accepted Answer

A)   a debit to Cash of $15,208
B)   a credit to Notes Payable for $10,808
C)   a debit to Interest Expense for $4,400
D)   a debit to Notes Payable for $15,208E) B) and D)
F) None of the above

Exam 12: Long-Term Liabilities: Bonds and Notes

Correct Answer
verified

The balance in a bond discount account should be reported on the balance sheet as a deduction from the related bonds payable.

Correct Answer
verified

Only callable bonds can be purchased by the issuing corporation before maturity.

Correct Answer
verified

Correct Answer
verified

Using the following table, what is the present value of $5,000 to be received 5 years, if the market rate is 10% compounded annually?

Correct Answer
verified
X = $5,000...
View Answer

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

Correct Answer
verified

Exam 12: Long-Term Liabilities: Bonds and Notes

Correct AnswerverifiedShow Answer

The balance in a bond discount account should be reported on the balance sheet as a deduction from the related bonds payable.

Correct AnswerverifiedShow Answer

Only callable bonds can be purchased by the issuing corporation before maturity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using the following table, what is the present value of $5,000 to be received 5 years, if the market rate is 10% compounded annually?

Correct AnswerverifiedX = $5,000...View AnswerShow Answer

When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds that pay interest annually. The selling price of this bond issue was

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
X = $5,000...
View Answer

Correct Answer
verified