Question
Need help with these 13 True or False Questions. A small explanation with each would be nice too. Thank you. Q5 The prices of bonds
Need help with these 13 True or False Questions. A small explanation with each would be nice too. Thank you.
Q5 The prices of bonds are quoted as a percentage of the bonds' market value
Q13 The effective interest rate method of amortizing a bond discount or premium is the preferred method
Q14 The amount of interest expense reported on the income statement will be more than the interest paid to bondholders if the bonds were originally sold at a discount
Q15 If the amount of a bond premium on an issued 11%, four-year, $100,000 bond is $12,928, the semiannual straight-line amortization of the premium is $1,416
Q19 If bonds are sold for a discount, the carrying value of the bonds is equal to the face value less the unamortized discount
Q20 Both callable and noncallable bonds can be purchased by the issuing corporation in the open market
Q24 Callable bonds can be redeemed by the issuing corporation at the fair market price of the bonds
Q28 If bonds of $1,000,000 with unamortized discount of $10,000 are redeemed at 98, the gain on redemption of bonds is $10,000
Q29 Discount on Bonds Payable is a contra liability account
Q31 The interest portion of an installment note payment is computed by multiplying the interest rate by the carrying amount of the note at the end of the period
Q37 If $500,000 of 10-year bonds with interest payable semiannually are sold for $494,040 based on (1) the present value of $500,000 due in 20 periods at 5% plus (2) the present value of twenty $25,000 payments at 5%, the nominal or contract rate and the market rate of interest for the bonds are both 10%.
Q38 One reason a dollar today is worth more than a dollar one year from today is the time value of money
Q39 When the effective interest rate method of amortization is used, the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bonds carrying value at the beginning of the given period
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