Accounting: Chapter 9 Practice Quiz Q&A
Sunrise Company sells $100,000 of 12%, 5-year bonds for 82.604 on April1, 2018. The market rate of interest on that day is 17.5%. Interest is paid each year on April 1. The issue price of the bond is $82,604.Sunrise Company uses thestraight-line amortization method. The amount of interest expense for each year will be (Round intermediary calculations to the nearest wholenumber.)
$15,479
A bond with a face amount of $15,000 has a current price quote of 104.35. What is the bond's price?
$15,652.50
A bond with a face value of $220,000 and a quoted price of 92 has a selling price of
$202,400
Beltran Company issued $350,000, 99%, fifteen-year bonds for 109, with interest paid annually. Assumingstraight-line amortization, what is the carrying value of the bonds after oneyear?
$379,400
Ferrell Corporation issued $2,700,000,15-year, 55% bonds for $2,538,000 on January 1, 2019. Interest is paid semiannually on January 1 and July 1. The corporation uses thestraight-line method of amortization. Ferrell's fiscal year ends on December 31. The amount of discount amortization on July1, 2019, would be
$5,400
Sweetwater Company sells $150,000 of 13%, 10-year bonds for 79.412 on April1, 2018. The market rate of interest on that day is 17.5%. Interest is paid each year on April 1. The entry to record the sale of the bonds on April 1 would be asfollows:(Intermediary and final answer calculations are rounded to the nearest wholenumber.)
(Debit) Cash- 119,118 (Debit) Discount on Bonds Payable- 30,882 (Credit) Bonds Payable 150,000
Trunks Unlimited reported income before taxes of $560,000, interest expense of $140,000, and net income of $414,400. Theweighted-average number of shares of common stock outstanding during the year was 150,000 shares. What is thetimes-interest-earned ratio?(Round your final answer to two decimalplaces.)
5.00
Duncan Corporation reported net income of $140,000, income before taxes of $238,000 and interest expense of $28,000. What is thetimes-interest-earned ratio?(Round your final answer to two decimalplaces.)
9.50
The journal entry on the maturity date to record the retirement of bonds with a face value of $500,000 that were issued at a $50,000 discount includes
A debit to Bonds Payable for $500,000
Bonds with an 8% stated interest rate were issued when the market rate of interest was 5%. This bond was issued at
A premium
Which of the following items is most likely a short-term liability?
Accounts Payable
Amortizing the discount on bonds payable
Amortizing the discount on bonds payable
The carrying value of Bonds Payable equals
Bonds Payable minus Discount on Bonds Payable.
The carrying value on bonds equals Bonds Payable
C.) minus Discount on Bonds Payable. D.) plus Premium on Bonds Payable. Both C and D
What type of account is Discount on Bonds Payable and what is its normal balance?
Contra Liability, Debit
Corporate bonds that can be exchanged for shares of the corporation's common stock if certain conditions are met are called
Convertible Bonds
Mission Furniture issued $500,000 in bonds payable at par. The journal entry to record a semiannual interest payment on these bonds would
Debit Interest Expense and credit Cash
The discount on a bond payable becomes
additional interest expense over the life of the bonds.
When a company retires bonds early, the gain or loss on the retirement is the difference between the cash paid and the
carrying value of the bonds
Tamiko Corporation retires its bonds at 109 on January1, after the payment of interest. The face value of the bonds is $600,000. The carrying value of the bonds at retirement is $618,000. The entry to record the retirement will include a
debit of $18,000 to Premium on Bonds Payable.
The Discount on Bonds Payable account
is a contra account to Bonds Payable
The debt ratio is calculated by dividing:
total debt by total assets.