Solved by verified expert :Multiple
Choice Question 137
Bonds that may be exchanged for common stock at the option of the
bondholders are called:
callable
bonds.
options.
convertible
bonds.
stock bonds
.
Multiple Choice Question 138
Bonds that are subject to retirement at a stated dollar amount
prior to maturity at the option of the issuer are called
early
retirement bonds.
debentures.
options.
callable
bonds.
Multiple
Choice Question 139
Bonds that are issued against the general credit of the borrower
are called
debenture
bonds.
callable
bonds.
term
bonds.
Secured
bonds.
Multiple
Choice Question151
The contractual interest rate on a bond is often referred to as
the:
Callable
rate.
stated
rate.
the
maturity rate.
market
rate.
Multiple
Choice Question 154
The interest expense recorded on an interest payment date is increased
only
if the market rate of interest is less than the stated rate of interest on
that date.
by the
amortization of premium on bonds payable.
by the
amortization of discount on bonds payable.
only
if the bonds were sold at face value.
Multiple
Choice Question 157
If the market rate of interest is 10%, a $10,000, 12%, 10-year
bond that pays interest annually would sell at an amount
less
than face value.
greater
than face value.
equal
to face value.
that
cannot be determined.
Multiple
Choice Question 164
Gomez Corporation issues 800, 10-year, 8%, $1,000 bonds dated
January 1, 2012, at 96. The journal entry to record the issuance will show a
debit
to Cash for $768,000.
credit
to Bonds Payable for $768,000.
debit
to Cash of $800,000.
credit to Discount on
Bonds Payable for $32,000.
Multiple Choice Question 167
The market rate of interest is often called the
coupon
rate.
contractual
rate.
stated
rate.
effective
rate.
Multiple
Choice Question 170
When bonds are issued at a premium, the total interest cost of the
bonds over the life of the bonds is equal to the amount of
interest
paid over the life of the bond.
interest
paid over the life of the bond plus the amount of premium at sale point.
interest
paid over the life of the bond minus the amount of premium at sale point.
premium at sale point.
Multiple Choice Question 175
In the balance sheet, the account Premium on Bonds Payable is
added
to bonds payable.
deducted
from bonds payable.
classified
as a stockholders’ equity account.
classified as a revenue
account.
Multiple Choice Question 180
The journal entry to record the issuance of bonds at a
discount will include a
debit
to Cash for the face amount of the bonds.
debit
to Cash for the face amount of the bonds plus the amount of the discount.
debit
to Cash for the face amount of the bonds minus the amount of the
discount.
redit to Cash for the
face amount of the bonds.
c
Multiple Choice Question 181
If bonds have been issued at a discount, then over the life
of the bonds the
carrying
value of the bonds will increase.
interest
expense will increase, if the discount is being amortized on a
straight-line basis.
carrying
value of the bonds will decrease.
unamortized
discount will increase.
Multiple Choice Question 190
Hogan Company has $500,000 of bonds outstanding. The unamortized
premium is $7,200. If the company redeemed the bonds at 101, what would
be the gain or loss on the redemption?
$2,200 loss
$5,000 loss
$5,000 gain
$2,200 gain
Multiple
Choice Question 199
Restoration Company issued bonds that had the following data associated
with them:
Interest to be paid is $40,000.
Interest expense to be recorded is $45,000.
Which of the following characteristics is true?
After
recording the interest expense, the amortization will decrease the bond
carrying value.
After
recording the interest expense, the amortization will increase the bond
carrying value.
The
difference between the interest expense and the interest to be paid is the
bond’s par value.
The bonds are sold at a
premium.
Multiple Choice Question 230
On January 1, Weatherholt Inc. issued $3,000,000, 9% bonds for
$2,817,000. The market rate of interest for these bonds is 10%. Interest is
payable annually on December 31. Jean Loptein uses the effective-interest
method of amortizing bond discount. At the end of the first year, Weatherholt
should report unamortized bond discount of
$153,000.
$164,700.
$154,830.
$171,300.
Multiple Choice Question 231
On January 1, Thompson Corporation issued $4,000,000, 14%,
5-year bonds with interest payable on December 31. The bonds sold for
$4,288,384. The market rate of interest for these bonds was 12%. On the
first interest date, using the effective-interest method, the debit entry
to Bond Interest Expense is for
$480,000.
$514,606.
$560,000.
$502,324.
Multiple
Choice Question 233
Warner Company issued $1,600,000 of 6%, 10-year bonds on one of
its interest dates for $1,381,920 to yield an effective annual rate of 8%. The
effective-interest method of amortization is to be used. The journal entry on
the first interest payment date, to record the payment of interest and
amortization of discount will include a
debit
to Bond Interest Expense for $128,000.
credit
to Discount on Bonds Payable for $14,554.
debit
to Bond Interest Expense for $96,000.
credit to Cash for
$110,554.
Multiple Choice Question 234
Warner Company issued $1,600,000 of 6%, 10-year bonds on one of
its interest dates for $1,381,920 to yield an effective annual rate of 8%.
The effective-interest method of amortization is to be used. How much bond
interest expense (to the nearest dollar) should be reported on the income
statement for the end of the first year?
$96,000
$110,844
$110,554
$110,262
Multiple
Choice Question 236
When the effective-interest method of amortization is used for a
bond premium, the amount of interest expense for an interest period is
calculated multiplying the
carrying
value of the bonds at the beginning of the period by the effective interest
rate.
face
value of the bonds at the beginning of the period by the contractual interest
rate.
face
value of the bonds at the beginning of the period by the effective interest
rate.
carrying
value of the bonds at the beginning of the period by the contractual interest
rate.
Multiple
Choice Question 237
The amortization of a bond premium will result in reporting an
amount of interest expense for an interest period that
exceeds
the amount of cash to be paid for interest for the period.
equals
the amount of cash to be paid for interest for the period.
has no
predictable relationship with the amount of cash to be paid for interest for
the period.
is
less than the amount of cash to be paid for interest for the period.
