6 Bond Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2017, at 103. The journal entry to record the issuance will show a A) debit to Cash of $5,000,000. credit to Premium on Bonds Payable for $150,000. C) credit to Bonds Payable for $5,030,000. B) D) credit to Cash for $5,150,000. E) None of the above 7 Premium on Bonds Payable A) has a debit balance. B) is a contra account. C) is considered to be a reduction in the cost of borrowing. D) is deducted from bonds payable on the balance sheet. E) None of the above 8 If bonds payable were issued initially at a discount, the carrying value of the bonds at a balance sheet date will be calculated by A) deducting the amount of discount amortized between the issuance date and the balance sheet date from the face value. B) deducting the balance of unamortized bond discount from the face value. C) adding the balance of unamortized bond discount to the face value. D) adding the amount of discount amortized between the issuance date and the balance sheet date to the face value. None of the above E)

6 Bond Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2017, at 103. The journal entry to record the issuance will show a A) debit to Cash of $5,000,000. credit to Premium on Bonds Payable for $150,000. C) credit to Bonds Payable for $5,030,000. B) D) credit to Cash for $5,150,000. E) None of the above 7 Premium on Bonds Payable A) has a debit balance. B) is a contra account. C) is considered to be a reduction in the cost of borrowing. D) is deducted from bonds payable on the balance sheet. E) None of the above 8 If bonds payable were issued initially at a discount, the carrying value of the bonds at a balance sheet date will be calculated by A) deducting the amount of discount amortized between the issuance date and the balance sheet date from the face value. B) deducting the balance of unamortized bond discount from the face value. C) adding the balance of unamortized bond discount to the face value. D) adding the amount of discount amortized between the issuance date and the balance sheet date to the face value. None of the above E)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PA: Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July...

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Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortization
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