Question : 131.Amortizing a discount bonds payable: A.Increases interest expense. B.Increases periodic cash payments : 1237431

 

 

131.Amortizing a discount on bonds payable:   

A.Increases interest expense.

 

B.Increases periodic cash payments to bondholders.

 

C.Decreases interest expense.

 

D.Decreases periodic cash payments to bondholders.

 

 

 

 

132.Premium on bonds payable:   

A.Is an asset account.

 

B.Increases the carrying value of the liability.

 

C.Is a contra-asset account.

 

D.Is disclosed by a footnote.

 

 

 

 

133.Amortizing a premium on bonds payable:   

A.Increases interest expense.

 

B.Increases periodic cash payments to bondholders.

 

C.Decreases interest expense.

 

D.Decreases periodic cash payments to bondholders.

 

 

 

 

134.On February 28, 2015, $5,000,000 of 6%, 10-year bonds payable, dated December 31, 2014, are issued. Interest on the bonds is payable semiannually each June 30 and December 31. If the total amount received (including accrued interest) by the issuing corporation is $5,060,000, which of the following is correct?   

A.The bonds were issued at a premium.

 

B.The amount of cash paid to bondholders on the next interest date, June 30, 2015, is $300,000.

 

C.The amount of cash paid to bondholders on the next interest date, June 30, 2015, is $50,000.

 

D.The bonds were issued at a discount.

($5,060,000 – ($5,000,000 × 6% × 2/12)) – $5,000,000 = $10,000 premium

 

 

 

Webster Company issues $1,000,000 face value, 6%, 5-year bonds payable on December 31, 2015. Interest is paid semiannually each June 30 and December 31. The bonds sell at a price of 97; Webster uses the straight-line method of amortizing bond discount or premium.

 

135.Refer to the information above. The entry made by Webster Company to record issuance of the bonds payable at December 31, 2015, includes:   

A.A debit to Cash of $1,000,000.

 

B.A debit to Discount on Bonds Payable of $30,000.

 

C.A credit to Bonds Payable of $970,000.

 

D.A credit to Bond Interest Payable of $30,000.

$1,000,000 – ($1,000,000 × .97) = $30,000

 

 

 

136.Refer to the information above. Webster’s entry at June 30, 2016, to record the first semiannual payment of interest and amortization of discount on the bonds includes a:   

A.Debit to Bond Interest Expense of $30,000.

 

B.Credit to Cash of $33,000.

 

C.Debit to Discount on Bonds Payable of $3,000.

 

D.Debit to Bond Interest Expense of $33,000.

($1,000,000 × 3%) + ($30,000/10) = $33,000

 

 

 

137.Refer to the information above. The amount of bond interest expense recognized by Webster Company in 2016 with respect to these bonds is:   

A.$60,000.

 

B.$63,000.

 

C.$120,000.

 

D.$66,000.

($1,000,000 × .06) + [2($30,000/10)] = $66,000

 

 

 

138.Refer to the information above. The carrying value of this liability in Webster Company’s December 31, 2016, balance sheet is:   

A.$1,000,000.

 

B.$970,000.

 

C.$976,000.

 

D.$967,000.

$970,000 + $6,000 = $976,000

 

 

 

Trego Company issued, on December 31, 2015, $1,000,000 face value, 4%, 5-year bonds. Interest will be paid semiannually each June 30 and December 31. The bonds sold at a price of 102; Trego uses the straight-line method of amortizing bond discount or premium.

 

139.Refer to the information above. The entry made by Trego Company to record issuance of the bonds payable at December 31, 2015, includes:   

A.A debit to Cash of $1,000,000.

 

B.A credit to Premium on Bonds Payable of $20,000.

 

C.A credit to Bonds Payable of $1,020,000.

 

D.A credit to Bond Interest Payable of $20,000.

$1,000,000 – ($1,000,000 × 1.02) = $20,000 premium

 

 

 

140.Refer to the information above. Trego’s entry at June 30, 2016, to record the first semiannual payment of interest and amortization of discount/premium on the bonds includes a:   

A.Debit to Bond Interest Expense of $20,000.

 

B.Credit to Cash of $22,000.

 

C.Credit to Premium on Bonds Payable of $2,000.

 

D.Debit to Bond Interest Expense of $18,000.

$1,000,000 × 2% – $20,000/10 = $18,000

 

 

 

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more