Question :
91) When a company retires bonds early, the gain or : 1230256
91) When a company retires bonds early, the gain or loss on the retirement is the difference between the cash paid and the:
A) face value of the bonds.
B) original selling price of the bonds.
C) maturity value of the bonds.
D) carrying value of the bonds.
92) Hudson Corporation retires its bonds at 106 on January 1. The face value of the bonds is $600,000. The carrying value of the bonds at retirement is $619,500. The entry to record the retirement will include a:
A) debit of $36,000 to Premium on Bonds Payable.
B) debit of $19,500 to Premium on Bonds Payable.
C) credit of $19,500 to Gain on Retirement of Bonds.
D) credit of $19,500 to Loss on Retirement of Bonds.
93) Bonds that the issuer may pay off at a prearranged price whenever the issuer chooses before the maturity date are:
A) serial bonds.
B) callable bonds.
C) convertible bonds.
D) debenture bonds.
94) Milton Corporation has $2,000,000 of bonds outstanding. The unamortized premium is $151,000. If the company retired the bonds at 101, what would be the gain or loss on the retirement?
A) $131,000 gain
B) $131,000 loss
C) $151,000 gain
D) $151,000 loss
95) Conversion of bonds payable into common stock will include a:
A) debit to bonds payable and a credit to common stock
B) debit to bonds payable and a credit to paid-in capital in excess of par
C) debit to cash and a credit to common stock.
D) debit to cash and a credit to paid-in capital in excess of par.
96) If bonds with a face value of $200,000 are converted into common stock when the carrying value of the bonds is $155,000, the entry to record the conversion would include a debit to:
A) Bonds Payable for $155,000.
B) Bonds Payable for $200,000.
C) Discount on Bonds Payable for $45,000.
D) Cash for $45,000.
97) Immediately after the last interest payment, Henderson Company converted $3,000,000 of its bonds into 300,000 shares of $10 par value common stock. The unamortized premium on the bonds at the date of the conversion was $870,000. As a result of this conversion:
A) liabilities decreased by $3,870,000 and stockholders’ equity increased by $3,000,000.
B) liabilities decreased by $3,000,000 and stockholders’ equity increased by $3,000,000.
C) liabilities decreased by $3,870,000 and stockholders’ equity increased by $3,870,000.
D) liabilities decreased by $870,000 and stockholders’ equity increased by $870,000.
98) XYZ Corporation has $30,000 of bonds outstanding with a carrying value of $38,400. The bonds are converted into 15,000 shares of $1 par value common stock. The common stock had a market value of $5 per share on the date of conversion. The entry to record the conversion would include a debit to bonds payable of:
A) $38,400.
B) $15,000.
C) $30,000.
D) $23,400.
99) Gardner Corporation has $2,400,000 of bonds outstanding with an unamortized discount of $120,000 immediately following the last interest payment. At that time, the bonds were converted into 250,000 shares of $10 par value common stock. As a result of this conversion:
A) liabilities decreased by $2,280,000 and stockholders’ equity increased by $2,280,000.
B) liabilities decreased by $2,400,000 and stockholders’ equity increased by $2,400,000.
C) liabilities decreased by $2,500,000 and stockholders’ equity increased by $2,500,000.
D) liabilities decreased by $2,280,000 and stockholders’ equity increased by $2,500,000.
100) On January 1, 2012, Kensington Valley Company issued bonds with a face value of $800,000. The bonds have a stated interest of 7% payable on January 1 and July 1.
1.Prepare the journal entry for the issuance of the bonds if issued at 97.
2.Prepare the journal entry for the issuance of the bonds if issued at 102.
Answer:
