Question 13 If the market interest rate is greater than the contractual interest rate, bonds will sell

A.at a discount. B.only after the stated interest rate is increased. C.at face value. D.at a premium.

Question 15 If the market interest rate is 5%, a $10,000, 6%, 10-year bond that pays interest annually would sell at an amount

A.greater than face value. B.less than face value. C.that cannot be determined. D.equal to face value.

Question 16 Oriole Company issues 1600, 10-year, 8%, $1000 bonds dated January 1, 2020, at 98. The journal entry to record the issuance will show a

A.debit to Cash for $1568000 B.debit to Cash of $1600000. C.credit to Discount on Bonds Payable for $32000. D.credit to Bonds Payable for $1632000.

Question 17 The market interest rate is often called the

A.coupon rate. B.effective rate. C.contractual rate. D.stated rate.

Question 19 If the present value of lease payments equals or exceeds 90% of the fair value of the leased property, the

A.conditions are met for the lease to be considered a capital lease. B.lease is uneconomical and should not be entered into. C.lease may be classified as an operating lease. D.recording of a lease liability is optionalthat is, the off-balance sheet approach can be elected.

Question 20 A lease where the intent is temporary use of the property by the lessee with continued ownership of the property by the lessor is called

A.a capital lease. B.an operating lease. C.a purchase of property. D.off-balance sheet financing.

Question 18 3400 bonds with a face value of $1000 each, are sold at 105. The entry to record the issuance is

A.Cash 3570000 Premium on Bonds Payable 170000 Bonds Payable 3400000

B.Cash 3400000 Premium on Bonds Payable 170000 Bonds Payable 3570000

C.Cash 3570000 Discount on Bonds Payable 170000 Bonds Payable 3400000

D.Cash 3570000 Bonds Payable 3570000

Question 14 On January 1, 2020, Vaughn Manufacturing issued $5800000, 10-year, 4% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2020 is

A.Cash 5800000 Bonds Payable 5800000

B.Cash 5916000 Bonds Payable 5916000

C.Premium on Bonds Payable 116000 Cash 5800000 Bonds Payable 5916000

D.Cash 5916000 Bonds Payable 5800000 Premium on Bonds Payable 116000