Question 1

What is the stated annual rate of interest on the bonds?

Accepted Answer

A)  3%.
B)  4%.
C)  6%.
D)  8%.E) B) and C)
F) A) and B)

Question 2

Determine the price of a $200,000 bond issue under each of the following independent assumptions:

Accepted Answer

The answer of Determine the price of a $200,000 bond...

Question 3

Use the following to answer questions 
Lopez Plastics Co.(LPC) issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity:
 
-LPC issued the bonds:

Accepted Answer

A)  At par.
B)  At a premium.
C)  At a discount.
D)  Cannot be determined from the given information.E) B) and D)
F) All of the above

Question 4

Bonds payable should be reported as a long-term liability in the balance sheet of the issuing corporation at the:

Accepted Answer

A)  Face amount price less any unamortized discount or plus any unamortized premium.
B)  Current bond market price.
C)  Face amount less any unamortized premium or plus any unamortized discount.
D)  Face amount less accrued interest since the last interest payment date.E) C) and D)
F) All of the above

Question 5

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the most correct term.

Accepted Answer

The answer of Listed below are 5 terms followed by...

Question 6

Companies are not required to,but have the option to,value some or all of their financial assets and liabilities at fair value.

Accepted Answer

A) True 
 B)False

Question 7

Distinguish between:
(a)Convertible and callable bonds.
(b)Serial and term bonds.

Accepted Answer

(a)Convertible bonds may be exchanged fo...

Question 8

Why do companies find the issuance of convertible bonds to be an attractive form of financing?

Accepted Answer

Convertible debt securities are attracti...

Question 9

The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest:

Accepted Answer

A)  Less the present value of all future interest payments at the rate of interest stated on the bond.
B)  Plus the present value of all future interest payments at the rate of interest stated on the bond.
C)  Plus the present value of all future interest payments at the market (effective) rate of interest.
D)  Less the present value of all future interest payments at the market (effective) rate of interest.E) A) and B)
F) A) and C)

Question 10

When bonds are sold at a discount,if the annual straight-line amortization amount is compared to the annual effective interest amortization amount over the life of the bond issue,the annual amount of the straight-line amortization of discount is:

Accepted Answer

A)  Higher than the effective interest amount every year.
B)  Higher than the effective interest amount in the early years and less than the effective interest amount in the later years.
C)  Less than the effective interest amount in the early years and more than the effective interest amount in the later years.
D)  Less than the effective interest amount every year.E) A) and D)
F) A) and B)

Question 11

Liberty Company issued 10-year bonds at 105 during the current year.In the year-end financial statements,the premium should be:

Accepted Answer

A)  Reported as an intangible asset.
B)  Included in revenue for the year of sale.
C)  Deducted from bonds payable.
D)  Added to bonds payable.E) B) and C)
F) None of the above

Question 12

When a company issues bonds between interest dates the entry to record the issuance of the bonds will:

Accepted Answer

A)  Include a debit to cash that has been reduced by accrued interest from the last interest date.
B)  Include a credit to accrued interest payable.
C)  Include a debit to interest expense.
D)  Be unaffected by the timing of issue.E) A) and B)
F) A) and C)

Question 13

The interest expense on an installment note decreases with each periodic payment.

Accepted Answer

A) True 
 B)False

Question 14

On March 1,2016,E Corp.issued $1,000,000 of 10% nonconvertible bonds at 103,due on February 28,2026.Each $1,000 bond was issued with 30 detachable stock warrants,each of which entitled the holder to purchase,for $50,one share of Evan's $25 par common stock.On March 1,2016,the market price of each warrant was $4.By what amount should the bond issue proceeds increase shareholders' equity?

Accepted Answer

A)  $ 0.
B)  $ 30,000.
C)  $ 90,000.
D)  $120,000.E) A) and B)
F) B) and C)

Question 15

Most corporate bonds are:

Accepted Answer

A)  Mortgage bonds.
B)  Debenture bonds.
C)  Secured bonds.
D)  Collateral bonds.E) None of the above
F) B) and D)

Question 16

Premium on bonds payable is a contra liability account.

Accepted Answer

A) True 
 B)False

Question 17

Auerbach issued the bonds:

Accepted Answer

A)  At par.
B)  At a premium.
C)  At a discount.
D)  Cannot be determined from the given information.E) A) and B)
F) None of the above

Question 18

Use the following to answer questions 
Lopez Plastics Co.(LPC) issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity:
 
-What is the annual stated interest rate on the bonds?

Accepted Answer

A)  3.5%
B)  6%
C)  7%
D)  None of the answer choices is correct.E) None of the above
F) A) and B)

Question 19

Straight-line amortization of bond discount or premium:

Accepted Answer

A)  Can be used for amortization of discount or premium in all cases and circumstances.
B)  Provides the same amount of interest expense each period as does the effective interest method.
C)  Is appropriate for deep discount bonds.
D)  Provides the same total amount of interest expense over the life of the bond issue as does the effective interest method.E) A) and C)
F) A) and D)

Question 20

Ordinarily,the proceeds from the sale of a bond issue will be equal to:

Accepted Answer

A)  The face amount of the bond.
B)  The total of the face amount plus all interest payments.
C)  The present value of the face amount plus the present value of the stream of interest payments.
D)  The face amount of the bond plus the present value of the stream of interest payments.E) A) and C)
F) A) and D)

Exam 14: Bonds and Long-Term Notes

The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest:

Correct Answer
verified

Liberty Company issued 10-year bonds at 105 during the current year.In the year-end financial statements,the premium should be:

Correct Answer
verified

Bonds payable should be reported as a long-term liability in the balance sheet of the issuing corporation at the:

Correct Answer
verified

Auerbach issued the bonds:

Correct Answer
verified

Ordinarily,the proceeds from the sale of a bond issue will be equal to:

Correct Answer
verified

What is the stated annual rate of interest on the bonds?

Correct Answer
verified

Companies are not required to,but have the option to,value some or all of their financial assets and liabilities at fair value.

Correct Answer
verified

When a company issues bonds between interest dates the entry to record the issuance of the bonds will:

Correct Answer
verified

Straight-line amortization of bond discount or premium:

Correct Answer
verified

Most corporate bonds are:

Correct Answer
verified

Determine the price of a $200,000 bond issue under each of the following independent assumptions:

Correct Answer
verified

Use the following to answer questions Lopez Plastics Co.(LPC) issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity: -What is the annual stated interest rate on the bonds?

Correct Answer
verified

Correct Answer
verified

Distinguish between: (a)Convertible and callable bonds. (b)Serial and term bonds.

Correct Answer
verified
(a)Convertible bonds may be exchanged fo...
View Answer

When bonds are sold at a discount,if the annual straight-line amortization amount is compared to the annual effective interest amortization amount over the life of the bond issue,the annual amount of the straight-line amortization of discount is:

Correct Answer
verified

Why do companies find the issuance of convertible bonds to be an attractive form of financing?

Correct Answer
verified
Convertible debt securities are attracti...
View Answer

The interest expense on an installment note decreases with each periodic payment.

Correct Answer
verified

Use the following to answer questions Lopez Plastics Co.(LPC) issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity: -LPC issued the bonds:

Correct Answer
verified

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the most correct term.

Correct Answer
verified

Premium on bonds payable is a contra liability account.

Correct Answer
verified

Exam 14: Bonds and Long-Term Notes

The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest:

Correct AnswerverifiedShow Answer

Liberty Company issued 10-year bonds at 105 during the current year.In the year-end financial statements,the premium should be:

Correct AnswerverifiedShow Answer

Bonds payable should be reported as a long-term liability in the balance sheet of the issuing corporation at the:

Correct AnswerverifiedShow Answer

Auerbach issued the bonds:

Correct AnswerverifiedShow Answer

Ordinarily,the proceeds from the sale of a bond issue will be equal to:

Correct AnswerverifiedShow Answer

What is the stated annual rate of interest on the bonds?

Correct AnswerverifiedShow Answer

Companies are not required to,but have the option to,value some or all of their financial assets and liabilities at fair value.

Correct AnswerverifiedShow Answer

When a company issues bonds between interest dates the entry to record the issuance of the bonds will:

Correct AnswerverifiedShow Answer

Straight-line amortization of bond discount or premium:

Correct AnswerverifiedShow Answer

Most corporate bonds are:

Correct AnswerverifiedShow Answer

Determine the price of a $200,000 bond issue under each of the following independent assumptions:

Correct AnswerverifiedShow Answer

Use the following to answer questions Lopez Plastics Co.(LPC) issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity: -What is the annual stated interest rate on the bonds?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Distinguish between: (a)Convertible and callable bonds. (b)Serial and term bonds.

Correct Answerverified(a)Convertible bonds may be exchanged fo...View AnswerShow Answer

When bonds are sold at a discount,if the annual straight-line amortization amount is compared to the annual effective interest amortization amount over the life of the bond issue,the annual amount of the straight-line amortization of discount is:

Correct AnswerverifiedShow Answer

Why do companies find the issuance of convertible bonds to be an attractive form of financing?

Correct AnswerverifiedConvertible debt securities are attracti...View AnswerShow Answer

The interest expense on an installment note decreases with each periodic payment.

Correct AnswerverifiedShow Answer

Use the following to answer questions Lopez Plastics Co.(LPC) issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity: -LPC issued the bonds:

Correct AnswerverifiedShow Answer

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the most correct term.

Correct AnswerverifiedShow Answer

Premium on bonds payable is a contra liability account.

Correct AnswerverifiedShow Answer

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(a)Convertible bonds may be exchanged fo...
View Answer

Correct Answer
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Correct Answer
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Convertible debt securities are attracti...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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