Question
2 A company calls its bonds at a price of $105,000. The face value is $100,000 and the carrying value of the bonds at the
2 A company calls its bonds at a price of $105,000. The face value is $100,000 and the carrying value of the bonds at the retirement date is $103,745. The issuer's journal entry to record the retirement will include a: A. Credit to Gain on Bond Retirement. B. Credit to Premium on Bonds. C. Debit to Premium on Bonds OD. Credit to Bonds Payable OE. Debit to Discount on Bonds. QUESTION 3 Which of the following is false regarding long-term notes payable? The note's carrying value at any time equals its face value minus any unamortized discount or plus any OA unamortized premium. OB. The market rate of interest at the time of issuance determines the periodic cash payment amount. C. Over the life of the note, the interest expense allocated to each period is computed by multiplying the market rate by the beginning-of-period balance. D. Notes payable are usually issued by a single lender. OE. The equal total payments pattern has changing amounts of both interest and principal. QUESTION 4 A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company calls these bonds at a price of $95,000 the gain or loss on retirement is: OA. None B. $500 Gain C. $5,000 Gain D. $5,000 Loss E. $500 loss QUESTION 5 On January 1, Parson Freight Company issues 8.5%, 10-year bonds with a par value of $4,300,000. The bonds pay interest semiannually. The market rate of interest is 9.5% and the bond selling price was $4.007.812. The bond issuance should be recorded as OA. Debit Cash $4,007,812; credit Bonds Payable $4,007,812 O B. Debit Cash $4,300,000; credit Bonds Payable $4,007,812; credit Discount on Bonds Payable $292,188. C. Debit Cash $4,007,812; debit Discount on Bonds Payable $292.188; credit Bonds Payable $4,300,000 OD. Debit Cash $4,007,812; debit Interest Expense $292,188; credit Bonds Payable $4,300,000. E. Debit Cash $4,300,000; credit Bonds Payable $4,300,000
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