What type of account is Discount on Bonds Payable, and what is its normal balance?a. Adjusting account; Creditb. Reversing account; Debitc. Contra liability account; Debitd. Contra liability account; Credit

What type of account is Discount on Bonds Payable, and what is its normal balance?a. Adjusting account; Creditb. Reversing account; Debitc. Contra liability account; Debitd. Contra liability account; Credit

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 4MCQ: What best describes the discount on bonds payable account? A liability An asset A contra liability...

See similar textbooks

Related questions

Q: Which of the following is a contra-liability account? a. Taxes Payable b. Accumulated Amortization…

A: Contra liability account is one that is debited for the explicit purpose of offsetting a credit to…

Q: The Discount on Bonds Payable account is: Multiple Choice O O O O O An expense. A liability. A…

A: An expense account is not carried forward and closed in the income statement. But Discount on Bonds…

Q: How to record bonds selling at discount, premium, and at par. Why are bonds recorded at discount,…

A: Bonds are debts instruments issued by corporates. Bonds are issued at par, premium and discount.…

Q: Premium on Bonds Payable is a(n) a. valuation account b. contra account c. accumulation account d.…

A: Premium on bonds payable : Premium on bonds payable arises when bonds payable are issued for an…

Q: Gains on the redemption of bonds are reported in the Other Revenue section of the income statement.…

A: Introduction: Income statement is considered as one of the key financial statements that shows a…

Q: How should discount on bonds payable be reported on the financial statements? Premium on bonds…

A: Concept: A premium on bonds occurs if, the bonds are issued at a high price than the face value. On…

Q: T or F A discount on bond payable is charged to interest expense using the effective interest…

A: Effective interest method - The effective interest method is a technique used to amortize a bond…

Q: Which of the following statements is true regarding secured and unsecured bonds? O Secured bonds are…

A: Solution: There are two types of bonds: 1. Secured bonds - These bonds are secured against specific…

Q: A debit to Discount on Bonds Payable would most likely be possible on which of the situations?…

A: The bonds are issued at discount when market rate is higher than the coupon rate of interest.

Q: The Discount on Bonds Payable accounta. is an expense account.b. is a contra account to Bonds…

A: Bonds: Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at…

Q: The amortization of premium on notes receivable is a. deduction from accrued interest receivable b.…

A: The bonds are issued at premium when market rate is lower than the coupon rate of bonds.

Q: Journalize the bond issuance. If an amount box does not require an entry, leave it blank.

Q: When accounting for a bond whose interest is included in the face amount, the account Discount in…

A: Discount in Bond payable Issue of bond which can be incurred in between face value, discount and…

Q: Bonds payable are initially recognized at A. issue price minus transaction costs incurred by the…

A: Bonds are the capital market securities that represent a borrowing instrument for the issuer of…

Q: The following items are found in the financial statements. Indicate how each of these items should…

A: Introduction: Balance sheet: All assets and liabilities are shown in Balance sheet. It tells the net…

Q: Bonds Payable is a type of current liabilities. True False

A: Bonds payable is a liability for the business, it means amount of bonds that the company has to…

Q: What amount of interest is expensed on a bond interest payment?

A: Whenever an interest payment is made on bonds, amount of interest expensed : Interest expensed =…

Q: How to calculate interest on bonds and how to journalize the interest.

A: Interest on bonds is computed on the basis of the rate mentioned on the bond on the face value of…

Q: Where and how are bonds proceeds recorded? Bond interest and bond principal payments?

A: Bond is a financial instrument issued by the company to raise funds for the growth and development…

Q: What type of account is Premium on Bonds Payable? What is its normal balance? Is it added to or…

A: Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various…

Q: T or F -Under generally accepted accounting principles, gain or loss must be recognized on the…

A: Conversion of Bonds- refers to the issue of equity or preferred stock to the bondholders to settle…

Q: A typical provision is: a. bonds payable. b. cash. c. a warranty liability. d. accounts…

A: Provision: An economic obligation created and maintained to cover the future liability is termed as…

Q: The journal entry a company makes for the payment of interest, interest expense, and amortization of…

A: Journal entries are passed following the golden rules of accounting. Debit all assets and expenses…

Q: When bonds are purchased between interest dates, the accrued interest should be a. debited to the…

A: Accrued Interest It is the unpaid interest which is earned by a bondholder since last interest…

Q: Bond issue costs a. should be amortized by the straight-line method to interest expense b. should…

A: 16 (a) should be amortized by the straight-line method to interest expense

Q: credit to Premium on Bonds Payable?

A: Premium on Bonds Payable is the amount at which it is issued in excess of par value. Premium on…

Q: Define the following items: Unearned revenue Inventory Notes payable

A: Hi student Since there are multiple subparts, we will answer only first three subparts. If you want…

Q: Compute bond proceeds, amortizing premium by interest method, and interest expense

Q: The journal entry a company records for the payment of interest, interest expense, and amortization…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: What is the main difference between notes payable and bonds payable?

A: Following are the differences between Bond and note payable. Bond are issued to raise long term…

Q: How do we compute for the Carrying Value beginning of a Bonds Payable? of a Notes Payable? Are there…

A: The carrying value (or "book value") of the bond at a given point in time is its face value minus…

Q: tion of forward rate is generally used in ______. A. immediate transactions B. previous…

A: Forward contracts are those to be settled on later period and they are not be settled today. They…

Q: Discount on Note Payable should be classified as a a. current asset b. contra account to Notes…

A: SOLUTION- IT HAS DEBIT BALANCE BECAUSE IT IS A CONTRA ACCOUNT TO NOTES PAYABLE ACCOUNT (A…

Q: Classifying Liability-Related Accounts into Balance Sheet or Income StatementIndicate the proper…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: When the initial present value of a bond payable is higher than its face amount, an entity would…

A: The answer is stated below:

Q: a. What is the discount or premium from the issuance of the bonds payable? Indicate whether…

Q: The balance in Unamortized Discount on Bonds Payable should be O a. reported separately in the…

A: Unamortized discounts on bonds payable are considered as a decrease in carrying value or book value…

Q: ll of the following are differences between IFRS and GAAP in accounting for liabilities except: a.…

A: Definition: Bonds: A bond is a debt instrument, which is repaid along with a specific rate of…

Q: Discount on Bonds Payable account

A: Discount on Bonds Payable account is deducted from outstanding liability of Bonds Payable in order…

Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

What type of account is Discount on Bonds Payable, and what is its normal balance?
a. Adjusting account; Credit
b. Reversing account; Debit
c. Contra liability account; Debit
d. Contra liability account; Credit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

What kind of account is the Discount on Bonds Payable? What kind of account is the Premium on Bonds Payable?
The premium on bonds payable account is shown on the balance sheet as A contra asset. A reduction of an expense. An addition to a long-term liability. A subtraction from a long-term liability.
What is the difference between a bond and a note? How do the accounting treatments differ?
When accounting for a bond whose interest is included in the face amount, the account Discount in Bonds Payable eventually is converted into Interest Payable Interest Receivable Interest Expense Interest Income
In the balance sheet, the account Discount on Bonds Payable is Group of answer choices added to bonds payable deducted from bonds payable classified as a stockholders equity account classified as an asset
Question Content Area The journal entry a company makes for the payment of interest, interest expense, and amortization of bond discount is a. debit Interest Expense and Discount on Bonds Payable, credit Cash b. debit Interest Expense, credit Cash c. debit Interest Expense, credit Interest Payable and Discount on Bonds Payable d. debit Interest Expense, credit Cash and Discount on Bonds Payable
The journal entry a company makes for the payment of interest, interest expense, and amortization of bond premium is a.debit Interest Expense, credit Cash and Premium on Bonds Payable b.debit Interest Expense, credit Cash c.debit Interest Expense and Premium on Bonds Payable, credit Cash d.debit Interest Expense, credit Interest Payable and Premium on Bonds Payable
When the initial present value of a bond payable is higher than its face amount, an entity would usually ________ the _______________________ account when recording amortization of interests. debit; Premium on Note Receivable credit; Premium on Note Receivable debit; Interest Expense credit; Interest Expense
Describe the accounting for bonds payable, including bonds issued at face amount, bonds issued at a discount , nd bonds issued at a premium ?
Classifying Liability-Related Accounts into Balance Sheet or Income StatementIndicate the proper financial statement classification (balance sheet or income statement) for each of the following liability-related accounts. Account Financial Statement a. Gain on Bond Retirement b. Discount on Bonds Payable c. Mortgage Notes Payable d. Bonds Payable e. Bond Interest Expense f. Bond Interest Payable (due next period) g. Premium on Bonds Payable h. Loss on Bond Retirement
On the balance sheet, the account Premium on Bonds Payable is: Select one: a. Added to Bonds Payable b. Added to Bond Interest Expense c. Deducted from Bond Interest Expense d. Deducted from Bonds Payable
Describe the accouting for bonds payaable, including bonds issued at face amount , bonds issued at a discount, and bonds issued at a premium.