Question : 81. Bonds that give the issuer an option of retiring them : 1256353

 

 

81. Bonds that give the issuer an option of retiring them prior to the date of maturity are: A. DebenturesB. Serial bondsC. Sinking fund bondsD. Registered bondsE. Callable bonds

 

 

82. A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement? A. $0 gain or lossB. $1,500 gainC. $1,500 lossD. $3,000 gainE. $3,000 loss

 

 

83. A company has bonds outstanding with a par value of $600,000. The unamortized discount on these bonds is $3,000. The company retired these bonds by buying them on the open market at 98. What is the gain or loss on this retirement? A. $0 gain or lossB. $9,000 gainC. $9,000 lossD. $14,500 gainE. $14,500 loss

 

 

84. A company has bonds outstanding with a par value of $400,000. The unamortized premium on these bonds is $2,000. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement? A. $0 gain or lossB. $10,000 gainC. $10,000 lossD. $14,000 gainE. $14,000 loss

 

 

85. 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: A. $1,000 gainB. $1,000 lossC. $2,700 lossD. $2,700 gainE. $3,700 gain

 

 

86. A company retires its bonds at 105. The carrying value of the bonds at the date of is $103,745. The issuer’s journal entry to record the retirement will include a: A. Debit to Premium on Bonds.B. Credit to Premium on Bonds.C. Debit to Discount on Bonds.D. Credit to Gain on Bond Retirement.E. Credit to Bonds Payable.

 

 

 

87. A corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium. On the interest date five years later, after the bond interest was paid and after 40% of the premium had been written off, the corporation purchased the entire issue on the open market at 99 and retired it. The gain or loss on this retirement is: A. $0B. $10,000 gainC. $10,000 lossD. $22,000 gainE. $22,000 loss

 

 

 

88. On October 1, a $30,000, 6%, three-year installment note payable is issued by a company. The note requires that $10,000 of principal plus accrued interest be paid at the end of each year on September 30. The issuer’s journal entry to record the second annual interest payment would include: A. A debit to Interest Expense for $1,800.B. A debit to Interest Expense for $1,200.C. A credit to Cash for $11,800.D. A credit to Cash for $10,000.E. A debit to Notes Payable for $1,200.

 

 

89. A corporation borrowed $125,000 cash by signing a five-year, 9% installment note requiring annual payments each December 31 of accrued interest plus equal amounts of principal. What journal entry would the issuer record for the first payment? A.

Interest Expense

2,250

 

Notes Payable

25,000

 

Cash

 

27,250

B.

Notes Payable

27,250

 

Interest Payable

 

2,250

Cash

 

25,000

C.

Interest Expense

11,250

 

Notes Payable

25,000

 

Cash

 

36,250

D.

Notes Payable

25,000

 

Cash

 

25,000

E.

Notes Payable

11,250

 

Cash

 

11,250

 

 

 

90. On January 1, 2013, Merrill Company borrowed $100,000 on a 10-year, 7% installment note payable. The terms of the note require Merrill to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, 2013 is:  

A.

Notes Payable

7,238

 

Interest expense

7,000

 

Cash

 

14,238

B.

Notes Payable

7,000

 

Interest expense

7,238

 

Cash

 

14,238

C.

Notes Payable

10,000

 

Interest expense

7,000

 

Cash

 

17,000

D.

Notes Payable

14,238

 

Cash

 

14,238

E.

Notes Payable

10,000

 

Interest expense

4,238

 

Cash

 

14,238