Question : 75.              When the face rate of interest lower than the : 1370076

 

 

75.              When the face rate of interest is lower than the market rate of interest on the date bonds are issued:

A)the proceeds from the issuance of the bonds are greater than the face value of the bonds

B)the bonds are issued at a premium

C)the bonds are issued at a discount

D)both a and b are correct

 

76.              The journal entry to record the interest expense of a bond payable issued at a premium would include a:

A)debit to Cash

B)credit to Bonds Payable

C)credit to Interest Expense

D)debit to Premium on Bonds Payable

 

 

77.              Bonds are issued at a premium when the:

A)proceeds from the issuance of the bonds are greater than the face value of the bonds

B)market rate of interest is lower than the face rate of interest on the bonds

C)face rate of interest on the bonds is equal to the market rate of interest

D)both a and b are correct

 

 

78.              The amortization of a premium on bonds payable:

A)increases the carrying value of the bonds

B)increases the amount of interest expense recorded for the bonds

C)decreases the amount of interest expense recorded for the bonds

D)has no effect on the amount of interest expense recorded for the bonds

 

 

79.              The amortization of a premium on bonds payable:

A)decreases the carrying value of the bonds

B)increases the amount of interest expense recorded for the bonds

C)decreases the amount of cash paid at the interest date

D)has no effect on the amount of interest expense recorded for the bonds

 

 

80.  On the maturity date of bonds issued at a premium:

A)the Premium on Bonds Payable account is zero

B)the carrying value of the bonds is greater than face value

C)the carrying value of the bonds is less than face value

D)both a and b are correct

 

 

81.              The amortization of a premium on bonds payable:

A)has no effect on the cash payments for interest reported in the operating activities section of the statement of cash flows

B)increases the cash payments for interest reported in the operating activities section of the statement of cash flows

C)decreases the cash payments for interest reported in the operating activities section of the statement of cash flows

D)is reported in the financing activities section of the statement of cash flows

 

82.              How does the amortization of discounts and premiums affect the carrying value of bonds?

Discount    Premium

A)Increase    Increase

B)Decrease   Increase

C)Increase    Decrease

D)Decrease   Decrease

 

 

83.              How does the amount of  premium and discount amortized in each period change over the term of bonds?

Discount     Premium

A)Increase    Increase

B)Decrease   Increase

C)Increase    Decrease

D)Decrease   Decrease

 

 

84.              Bonds payable have a face amount of $1,000,000 and a discount of $10,000.  The face interest rate is 9 percent and the effective interest rate is 10 percent.  If the annual interest payment is due today, what amount of interest expense should be recorded?

A)$100,000

B)$  99,000

C)$  90,000

D)$  89,100

 

 

 

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