Question : 51.Bonds with a face value of $200,000 were issued at : 1169139

 

 

51.Bonds with a face value of $200,000 were issued at 103. The entry to record the issuance will include a debit to the Cash account for   

A. $206,000.

 

B. $200,000.

 

C. $103,000.

 

D. $230,000.

 

 

 

 

52.The Premium on Bonds Payable account is shown   

A. in the Current Assets section of the balance sheet.

 

B. in the Current Liabilities section of the balance sheet.

 

C. in the Long-Term Liabilities section of the balance sheet.

 

D. in the Revenue section of the income statement.

 

 

 

 

53.Which of the following is not a disadvantage of raising capital through the issue of bonds payable?   

A. the bonds are classified as a long-term liability

 

B. interest must be paid even if the firm suffers a loss

 

C. the face amount must be repaid at maturity

 

D. interest is deductible for income tax purposes

 

 

 

 

54.The entry to record the adjustment for accrued bond interest includes   

A. a debit to Bond Interest Expense and a credit to Cash.

 

B. a debit to Bond Interest Expense and a credit to Bond Interest Payable.

 

C. a debit to Bond Interest Payable and a credit to the Bond Interest Expense.

 

D. a debit to Bond Interest Expense and a credit to Bonds Payable.

 

 

 

 

55.When bonds are issued at a premium, the bond premium   

A. reduces the amount of interest expense over the life of the bonds.

 

B. increases the amount of interest expense over the life of the bonds.

 

C. does not change the amount of interest expense over the life of the bonds.

 

D. is charged to interest expense when the bonds are issued.

 

 

 

 

56.A company issues 8%, 20-year bonds with a par value of $400,000. The current market rate of interest is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is:   

A. $36,000.

 

B. $32,000.

 

C. $18,000.

 

D. $16,000.

 

 

 

57.A company issued 6%, 10-year bonds with a par value of $500,000. The current market rate of interest is 5%. The journal entry to record each semiannual interest payment is:   

A. 

 

 

B. 

 

 

C. 

 

 

D. 

 

 

 

 

 

58.A company issues 6%, 10 year bonds with a par value of $500,000 at 98. The current market rate of interest is 7%. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:   

A. 

 

 

B. 

 

 

C. 

 

 

D. 

 

 

 

 

 

59.A company issued 6%, 10 year bonds with a par value of $500,000 on April 1. Interest is payable each Sept. 30 and March 31. The journal entry to accrue interest expense as of December 31 is:   

A. 

 

 

B. 

 

 

C. 

 

 

D. 

 

 

 

 

60.Bonds with a face value of $400,000 were issued at 98. The entry to record the issuance will include a credit to the Bonds Payable account for   

A. $408,000.

 

B. $392,000.

 

C. $400,000.

 

D. $398,000.