ACCOUNTING

equation for total interest on a discount

(PMT*n)+original discount

interest expense has a normal balance of

Debit

Cash Interest payment PMT=

Face Value*Stated Rate*Time

Bond payable is always at

Face value

Bonds that may be retired at a prearranged price are called:

callable bonds

Bonds payable minus the Discount on bonds payable yields the:

carrying amount

Interest Expense =

carrying value*i

on incurring an interest expense discounts and premiums are

contra meaning they go opposite on the journal entry

Bonds that can be exchanged for stock are called:

convertable bonds

Bonds that are backed only by the credit of the issuing company are:

debenture bonds.

A $260,000 issue of bonds that sold for $255,000 matures on June 25, 2020. The journal entry to record the payment of the bond on the maturity date is to:

debit Bonds payable, $260,000; credit Cash, $260,000

Amortization of discount

increases interest expense

If the market rate of interest is less than the bond's stated rate of interest, the bond will be issued at:

premium

Interest expense will be less than the interest payment when bonds are issued at

premium

issuance price is the same as

present value

The amount that a borrower must pay back to the bondholders on the maturity date is the:

principle

Bonds that are backed by collateral are:

secured bonds

Bonds from the same bond issue that mature at different times are called:

serial bonds.

Bonds that mature all at the same time are:

term bonds

Debenture bonds are the same as:

unsecured bonds

the carrying value is the

Present value