Question :
11) The adjusting entry to record the amount of interest : 1253339
11) The adjusting entry to record the amount of interest owed on a bond affects how many of the financial statements?
A) one
B) two
C) three
D) four
12) If a bond is sold at a premium, the carrying value reported on the balance sheet in subsequent years ________.
A) stays the same each year
B) increases each year
C) decreases each year
D) changes every year as the market rate of interest changes
13) If a bond is sold at a discount, the carrying value reported on the balance sheet in subsequent years ________.
A) stays the same each year
B) increases each year
C) decreases each year
D) changes every year as the market rate of interest changes
14) On January 1, 2011, Nadir Company issued $1,000,000 of 6%, 20-year bonds when the market rate of interest was 5%. The bonds pay interest annually on December 31. On its balance sheet at December 31, 2011, Nadir will show bonds payable of $1,000,000 ________.
A) minus the unamortized discount
B) plus the unamortized discount
C) minus the unamortized premium
D) plus the unamortized premium
15) On January 1, 2011, Nadir Company issued $1,000,000 of 6%, 20-year bonds when the market rate of interest was 5%. The bonds pay interest annually on December 31. Nadir uses the effective interest method of amortization. On its income statement for the year ended December 31, 2011, Nadir will show interest expense of ________.
A) exactly $60,000
B) more than $60,000
C) less than $60,000
D) The answer cannot be determined without knowing the price for which the bonds were sold.
16) On January 1, 2011, Nadir Company issued $1,000,000 of 6%, 20-year bonds when the market rate of interest was 5%. The bonds pay interest annually on December 31. Nadir uses the effective interest method of amortization. On its statement of cash flows for the year ended December 31, 2011, Nadir will show ________ cash paid for ________ activities.
A) $(60,000); financing
B) $(60,000); operating
C) $(50,000); financing
D) $(50,000); operating
17) On January 1, 2011, Alpha Company issued $1,000,000 of 5%, 20-year bonds to buy a new computerized accounting system. The market rate of interest was 6%. The bonds pay interest annually on December 31. Alpha uses the effective interest method of amortization. On its income statement for the year ended December 31, 2011, Alpha will show interest expense of ________.
A) exactly $50,000
B) more than $50,000
C) less than $50,000
D) The answer cannot be determined without knowing the price for which the bonds were sold.
18) On January 1, 2011, Alpha Company issued $1,000,000 of 5%, 20-year bonds to buy a new computerized accounting system. The market rate of interest was 6%. The bonds pay interest annually on December 31. Alpha uses the effective interest method of amortization. On its statement of cash flows for the year ended December 31, 2011, Alpha will show ________ cash paid for ________ activities.
A) $(60,000); financing
B) $(60,000); operating
C) $(50,000); financing
D) $(50,000); operating
