Question : 21) Plaza Corporation issued $350,000 of 8%, 10-year bonds for : 1171164

 

21) Plaza Corporation issued $350,000 of 8%, 10-year bonds for 102. The entry to record the issuance of the bonds includes a:

A) debit to Discount on Bonds Payable for $7,000.

B) credit to Bonds Payable for $343,000.

C) debit to Bonds Payable for $350,000.

D) credit to Premium on Bonds Payable for $7,000.

22) On October 1, Allan Company issued 8%, 10-year, $300,000 bonds at 105. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

A) $0.

B) $24,000.

C) $12,000.

D) $6,000.

23) On April 1, Braintree Corporation issued 10%, 10-year, $600,000 bonds at 106. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

A) $0.

B) $15,000.

C) $30,000.

D) $31,000.

24) Manning Corporation sells $100,000, 12%, 10-year bonds for 98 on January 1. Interest is paid on January 1 and July 1. Straight-line amortization is used. The entry to record the issuance of the bonds on January 1 is:

A)

Cash

100,000

Bonds Payable

100,000

 

B)

Cash

100,000

Discount on Bonds Payable

2,000

          Bonds Payable

98,000

 

C)

Cash

98,000

Bonds Payable

98,000

 

D)

Cash

98,000

Discount on Bonds Pay.

  2,000

Bonds Payable

100,000

25) Bonds are issued for $20,000 at face value with 6% interest on October 1. What is the adjusting entry on December 31?

A)

Bond Interest Expense

1,200

Bond Interest Payable

1,200

 

B)

Bond Interest Expense

300

Bond Interest Payable

300

 

C)

Bond Interest Payable

300

Bond Interest Expense

300

 

D)

Bond Interest Payable

1,200

Bond Interest Expense

1,200

26) Bonds are issued for $80,000 at 12% face value on September 1. The stated interest is 12% and interest is paid on September 1 and March 1. What is the adjusting entry on December 31?

A)

Bond Interest Expense

3200

Bond Interest Payable

3200

 

B)

Bond Interest Expense

2400

Bond Interest Payable

2400

 

C)

Bond Interest Expense

1600

Bond Interest Payable

1600

 

D)

Bond Interest Payable

9600

Bond Interest Expense

9600

27) Casey issued bonds for $20,000 at 12% face value on July 1. 12% interest payments are due January 1 and July 1. What is the adjusting entry on December 31?

A)

Bond Interest Expense

200

Bond Interest Payable

200

 

B)

Bond Interest Expense

1200

Bond Interest Payable

1200

 

C)

Bond Interest Expense

2400

Bond Interest Expense

2400

 

D)

Bond Interest Payable

1400

Bond Interest Expense

1400

28) When making the adjustment for accrued interest, the Bond Premium account was not taken into account. This error would cause:

A) the period end assets to be overstated.

B) the period end liabilities to be understated.

C) the period’s net income to be understated.

D) None of the above is correct.

29) When making the adjustment for accrued interest the Bond Discount account was not taken into consideration. This error would cause:

A) the period end assets to be overstated.

B) the period end liabilities to be understated.

C) the period’s net income to be overstated.

D) Both B and C are correct.

30) On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 102. What is the adjusting entry on December 31 using the straight-line method?

A)

Bond Interest Expense

800

Bond Interest Payable

800

 

B)

Bond Interest Expense

200

Bond Interest Payable

200

 

C)

Bond Interest Expense

190

Premium on Bonds Payable

10

Bond Interest Payable

200

 

D)

Bond Interest Expense

210

Premium on Bonds Payable

10

Bond Interest Payable

200