Question
8/ A bond issue of $100,000 selling at 98, would require a journal entry including a a.credit to Cash for $98,000. b.debit to Discount on
8/ A bond issue of $100,000 selling at 98, would require a journal entry including a
a.credit to Cash for $98,000.
b.debit to Discount on Bonds Payable for $2,000.
c.credit to Premium of Bonds Payable for $2,000.
d.debit to Bonds Payable for $98,000.
9/ If the interest rate on bonds is higher than the current market rate, they will sell at
a.a premium.
b.maturity value.
c.a discount.
d.face value.
10/ The year-end adjusting entry required for bonds issued at a discount would require
a.a debit to Bond Interest Expense, a debit to Discount on Bonds Payable, and a credit to Bond Interest Payable.
b.a debit to Bond Interest Expense, a credit to Discount on Bonds Payable, and a credit to Cash.
c.a debit to Bond Interest Expense, a credit to Discount on Bonds Payable, and a credit to Bond Interest Payable.
d.a debit to Bond Interest Expense, a debit to Discount on Bonds Payable, and a credit to Cash.
11/ The carrying value of bonds is calculated by
a.adding the premium on bonds payable account balance to the bonds payable account balance.
b.adding the bonds payable account balance to the bond interest payable account balance.
c.adding the discount on bonds payable account balance to the bonds payable account balance.
d.subtracting the premium on bonds payable account balance from the bonds payable account balance.
12/ If the rate of interest on bonds is lower that the current market rate, the bonds will sell at
a.face value.
b.a premium.
c.maturity value.
d.a discount.
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