ACT 262 Test 2
Other Receipts
"_____________ _____________" are general cash received from rent, interest and dividends.
Debt- to- Equity Ratio
(Total Liabilities)/ (Total Equity)
Bonds Payable
ALWAYS go on at par value.
Cash
ALWAYS go on at value for which bonds are sold.
Equal
At maturity, carrying value will _________ the par value (when retiring bonds)
Contract Rate < Market Rate
Bond sells at DISCOUNT
Contract Rate = Market Rate
Bond sells at PAR
Contract Rate > Market Rate
Bond sells at PREMIUM
Bond Interest Expense
Carrying Value X Market Rate X 6/12
First Semiannual Interest Expense
Debit to Bond Interest Expense, Credit to Cash.
Bond Retirement at Maturity
Debit to Bonds Payable, Credit to Cash.
Bond Retirement by Conversion
Debit to Bonds Payable, Credit to Common Stock, Credit to Paid-in Capital in Excess of Par Value.
Bond Retirement Before Maturity
Debit to Bonds Payable, Debit to Premium on Bonds Payable, Credit to Gain on Bond Retirement, and Credit to Cash. (Or Debit Loss and Credit Discount).
Issuance of a Bond
Debit to Cash, Credit to Bonds Payable.
Issuing Bonds at a Premium
Debit to Cash, Credit to Premium on Bonds Payable, and Credit to Bonds Payable
Issuing Bonds at a Discount
Debit to Cash, Debit to Discount on Bonds Payable, and Credit to Bonds Payable.
Noncash
Depreciation: +, Losses: +, Gains: -
Contra-Liability
Discount on Bonds Payable is a _______________ Account.
DEBITED
Discounts are _______________.
Current Assets
Increase: -, Decrease: +
Current Liabilities
Increases: +, Decreases: -
Comparative Balance Sheets, Current Income Statement and Other Information
Information sources to prepare the Statement of Cash Flows.
Long-Term Notes Payable
Installment Notes and Mortgage Notes
Cash Interest Paid
Par Value X Annual Contract Rate X 6/12
Interest Expense
Par Value X Interest Rate X Period
Unamortized Discount
Par Value- other number
Mortgage
Pledge title to specific assets as security for the note. Lender has the right to foreclose if the borrower fails to pay.
Adjunct
Premium on Bonds Payable is a ______________ liability account.
CREDITED
Premiums are _____________.
Installment Note
Record initially as a single payment note. Payments include interest expense accruing to date of payment plus principal.
Note Payable
Similar to a bond payable but is normally transacted with a single lender such as a bank.
risk
The Debt- to- Equity ratio is used to determine the _________ of a company's financing structure.
Carrying Value
The bond ____________ ___________ can be determined by taking the bond par value minus the discount on bonds payable.
annual; semiannually
The contract rate is usually stated on a(n) _____________ basis even if interest is paid _________________.
Discount Amortized
Unamortized Discount/ # of periods
Reconstruction Analysis
Used to explains the changes in investing and financing related accounts.
Bond
a written promise to pay an amount identified as the par value (or face value) of the bond along with interest (usually semiannually) at a stated annual rate.
