Financial Accounting Chapter 9 LearnSmart

The Journal entry to record the issuing of 100 bonds at their $1000 face value will include a debit to _____ and a credit to _____

Cash/Bonds Payable

Werner issues bonds at a discount. The related Discount account should be classified as a

Contra Liability

______ bonds require payment of the full principle amount of the bond at the end of the loan term

Term

For bonds issued at a premium, interest expense will

increase over time

When a corporation repurchases its bonds from the bondholders, the bonds are called

retired bonds

Effective Interest Rate

yield rate of bonds, equal to the market rate of interest on the day the bonds are sold

The carrying value at maturity is equal to the face amount of bonds issued at

face amount, discount, premium

Totito Inc. issues $100,000 face amount bonds at 98. The journal entry to record the issuance should include

-A debit to discount on bonds payable for $2000 -A credit to bonds paybale for $100,000

ABC Company issues a bond with a face value of $100,000 at par on January 1. The bond carries a stated annual interest rate of 6% payable in cash on December 31 of each year. If ABC issues monthly financial statements, it must make an adjusting entry on January 31 that includes

-A debit to interest expense $500 -A credit to Interest payable of $500

Which of the following information shown is typically shown in a bond amorization schedule?

-Carrying Value -Cash Paid -Interest Expense

Totito issues $100,000 face amount bonds at 98. The journal entry to record the issuance of the bonds should include debits

-Discount on bonds payable -Cash for 98,000

_______ financing refers to obtaining investment from stockholders.

Equity

Two types of financing are?

Equity and Debt

If a company chooses the fair value option, changes in fair value must be recognized in the

Income Statement

The mixture of debt financing and equity financing a company uses is referred to as the companys ______ structure

capital

The Discount on Bonds Payable account is classified as a

contra-liability

Slater Company issues 1 million face amount bonds for 1.1 million. On the date of maturity, the carrying value of the bonds will be equal to

1 million

When bonds are issued at a premium, the carrying value of the debt _______ over time.

decreases