Financial Accounting: Ch 10, 11, 12
A company issues $100,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $98,000 for the bonds, the issuer will record the sale with a (debit/credit) _________ , to Bonds Payable in the amount of $___________.
-credit -100,000
A company issues $400,000 of 8%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with a (debit/credit) ___________ to Bonds Payable in the amount of $__________.
-credit -400,000
When the market rate is 10%, a company issues $60,000 of 12%, 10-year bonds and pay interest semiannually. When the bonds mature, the issuer records its payment of principal with a (debit/credit) ________ to Cash in the amount of $________.
-credit -60,000
A company issues $80,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $84,000 for the bonds, the issuer will record the sale with a (debit/credit) __________ to (Discount/Premium) ___________ on Bonds Payable in the amount of $4,000.
-credit -premium
A company issues $90,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $85,000 for the bonds, the issuer will record the sale with a (debit/credit) _______ to Discount on Bonds Payable in the amount of $________.
-debit -5,000
Bond market values are expressed as a percentage of their par (face) value. For example, a company's bonds might be trading at 103, which means that they can be bought or sold for ________ of their par value.
103%
Since bond market values are expressed as a percentage of their bond value, a $1,000 bond that is sold at 93 will trade at $_______.
930
A company issues $500,000 of 6%, 10-year bonds dated January 1, 2017 that mature on December 31, 2026. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with which of the following entries?
Debit to Cash $500,000; and credit to Bond Payable $500,000
The bond carrying value can be determined by which of the following formulas?
Par value - discount on bonds payable
Forever, Inc. announces an offer to issue bonds with a $100,000 par value, an 8% annual contract rate (paid semiannually) and a two-year life. The market rate is 10%, so the bonds will be sold at: Multiple choice question.
a discount
The ________ rate is the interest rate specified, sometimes referred to as the coupon rate, stated rate, or nominal rate.
contract
A(n) __________ on bonds payable occurs when a company issues bonds with a contract rate less than the market rate.
discount
The legal contract between the bondholders and the issuer is called the bond ______.
indenture
A company borrows $60,000 from a bank to purchase equipment. It signs an 8% note requiring six annual payments of principal plus interest. This is an example of a(n) ___________ note.
installment
The par value of a bond, also called the face value, is paid at a stated future date, known as the bond's _________ date.
maturity
Lyle Co. borrowed $20,000 from First Bank by signing a written promise to pay a definite sum of money on a specific future date. Lyle will record this in the general ledger as a(n) ______ payable
notes
The ________ value of a bond, also called the face amount or face value, is paid at a stated future date, known as the bond's maturity date.
par
The bond carrying value can be determined by taking the bond ______ value minus the discount on bonds payable.
par
The bond contract rate determines the annual interest paid by multiplying the bond ______ value by the contract rate.
par
When the contract rate of the bonds is higher than the market rate, the bond sells at a higher price than par value. The amount by which the bond price exceeds par value is the _______ on bonds.
premium
When the market rate is less than the bond contract rate on the date of issuance, the bonds will be sold at a (discount/premium)
premium
