Ch 12: Long-Term Liabilities

A $400,000 bond priced at 102 can be bought or sold for

$408,000

Jessica's Antiques issued its 4%, 20-year bonds payable at a price of $288,500 (face value is $300,000). The company uses the straight-line amortization method for the bonds. Interest expense for each year is

$12,575

A five-year, $100,000, 4% Note payable was issued on December 31, 2011. The note requires principal payments of $20,000 plus interest due each year beginning December 31, 2012. On December 31, 2013, immediately after the note payment, the balance sheet would show

$40,000 in Long-term notes payable.

Bonds payable with face value of $500,000 and term of 20 years were issued on January 1, 2014, for $510,000. On the maturity date, what amount will the company pay to bondholders?

$500,000

Jana's Fitness Drinks has $850,000 of 20-year bonds payable outstanding. These bonds had a discount of $42,000 at issuance, which was 8 years ago. The company uses the straight-line amortization method. The carrying amount of these bonds payable today is

$833,200

Crystal, Inc.'s trial balance shows $800,000 face value of bonds with a discount balance of $12,000. The bonds mature in 20 years. How will the bonds be presented on the balance sheet?

Bonds payable $788,000 (net of $12,000 discount) will be listed as a long-term liability.

Dawson Company issued $400,000 of 8% serial bonds at face value on December 31, 2014. Half of the bonds mature January 1, 2017, while the other half of the bonds mature January 1, 2025. On December 31, 2016, the balance sheet will show which of the following?

Bonds payable of $200,000 will be listed as a long-term liability. Bonds payable of $200,000 will be listed as a current liability.

Which of the following is the correct journal entry to record the issuance of a $250,000 face value bond at 95?

Cash 237,500 Discount on Bonds Payable 12,500 Bonds Payable 250,000

Devon signed a 20-year note payable on January 1, 2016. The note requires annual principal payments plus interest. The entry to record the annual payment on December 31, 2016 includes

a debit to Interest expense.

Cat Corporation's bonds payable carry a stated interest rate of 8%, and the market rate of interest is 5%. The price of the Cat's bonds will be at

a premium.