Question
5.Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400every 6 months. 6.When the corporation issuing the
5.Interest payments on 12% bonds with a face value of $20,000 and interest paid semiannually would be $2,400every 6 months.
6.When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity, the bonds are
debenture bonds
callable bonds
unsecured bonds
convertible bonds
7.If $1,000,000 of 8% bonds are issued at 102 3/4, the amount of cash received from the sale is
$1,027,500
$972,500
$1,080,000
$1,000,000
8.If bonds are issued at a discount, it means that the
financial strength of the issuer is suspect
market interest rate is lower than the contractual interest rate
bondholder will receive effectively less interest than the contractual rate of interest
market interest rate is higher than the contractual interest rate
9.The journal entry a company records for the issuance of bonds when the contract rate and the market rate are thesame is to
debit Cash and Discount on Bonds Payable, credit Bonds Payable
debit Bonds Payable, credit Cash
debit Cash, credit Premium on Bonds Payable and Bonds Payable
debit Cash, credit Bonds Payable
10. The journal entry a company records for the payment of interest, interest expense, and amortization of bonddiscount is
debit Interest Expense and Discount on Bonds Payable, credit Cash
debit Interest Expense, credit Cash
debit Interest Expense, credit Cash and Discount on Bonds Payable
debit Interest Expense, credit Interest Payable and Discount on Bonds Payable
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