Question 1

On November 1,2015,Archangel Services issued $200,000 of 10-year bonds with a stated rate of 3%.The bonds were sold at par,and make semiannual payments on April 30 and October 31.At December 31,2015,Archangel made an adjusting entry to accrue interest at year-end.No further entries were made until April 30,2016,when the first payment was sent out.At that time,how much interest expense was recorded for the period of January through April,2016?

Accepted Answer

A) Calculations: $200,000 × 3% × 4/12 = $2,000

Question 2

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.Assume Blanding uses the straight-line method for amortization.The interest accrual entry at December 31,2014 would include:

Accepted Answer

B) Calculation: $1,000,000 × 8% × 4/12 = $26,667

Question 3

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2014.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.Assume the company uses the straight-line method for amortization.What net balance will be reported for the bonds on the balance sheet on September 30,2014?

Accepted Answer

C) Calculations: $500,000 + ($15,000 - $750) = $514,250

Question 4

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.The journal entry to record the issuance would include a:

Accepted Answer

D) Calculations: 1,000,000 × 98% = 980,000

Question 5

McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.On June 30,2013,the first semiannual interest payment is made.How much will be paid out to bondholders on June 30,2013?

Accepted Answer

C) Calculations: $20,000 × 3% × 6/12 = $300

Question 6

McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.The journal entry to record the issuance of the bonds on March 1,2013 will include which of the following?

Accepted Answer

A) Calculations: $20,000 × 3% × 2/12 = $100

Question 7

McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.How much cash will McDonald receive for the bonds?

Accepted Answer

C) Calculations: $20,000 + ($20,000 × 3% × 2/12) = $20,100

Question 8

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2014.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.Assume the company uses the straight-line method for amortization.The journal entry to record the issuance would include a:

Accepted Answer

D) Calculations: $500,000 × 103% = $515,000

Question 9

McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.On June 30,2013,the first semiannual interest payment is made.The journal entry to record that interest payment will include which of the following line items?

Accepted Answer

D) Calculations: $20,000 × 3% × 4/12 = $200

Question 10

On November 1,2015,Archangel Services issued $200,000 of 10-year bonds with a stated rate of 3%.The bonds were sold at discount for $191,000,and make semiannual payments on April 30 and October 31.At December 31,2015,Archangel made an adjusting entry to accrue interest at year-end.No further entries were made until April 30,2016 when the first interest payment was made.How much interest expense will be recorded for the period of January through April,2016?

Accepted Answer

D) Calculations: $200,000 × 3% × 4/12 = $2,000
($9,000/10) × 4/12 = $300

Question 11

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2012.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.On August 31,2012,how much cash did Blanding pay out to bondholders?

Accepted Answer

B) Calculations: $1,000,000 × 8% × 6/12 = $40,000

Question 12

On November 1,2015,Archangel Services issued $200,000 of 10-year bonds with a stated rate of 3%.The bonds were sold at par,and make semiannual payments on April 30 and October 31.At December 31,2015,Archangel made an adjusting entry to accrue interest at year-end.How much interest expense will be recorded at December 31,2015?

Accepted Answer

B) Calculations: $200,000 × 3% × 2/12 = $1,000

Question 13

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.Assume Blanding uses the straight-line method for amortization.The journal entry to record the first interest payment on August 31,2014 would be a:

Accepted Answer

B) Calculations: ($1,000,000 × 8% × 6/12) + ($20,000/10) × 6/12 = $41,000

Question 14

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2013.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.On September 30,2013,how much cash did the company pay out to bondholders?

Accepted Answer

C) Calculations: $500,000 × 6% × 6/12 = $15,000

Question 15

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2014.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.Assume the company uses the straight-line method for amortization.The journal entry to record the first interest payment on September 30,2014 is a:

Accepted Answer

C) Calculations: ($500,000 × 6% × 6/12) - ($15,000/10) × 6/12 = $14,250

Question 16

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.Assume Blanding uses the straight-line method for amortization.What net balance will be reported for the bonds on the balance sheet on August 31,2014?

Accepted Answer

A) Calculations: $1,000,000 - $19,000 = $981,000

Question 17

McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.On June 30,2011,the first semiannual interest payment is made.How much is the total amount of interest expense McDonalds will record for the first half of 2013?

Accepted Answer

B) Calculations: $20,000 × 3% × 4/12 = $200

Question 18

On November 1,2015,Archangel Services issued $200,000 of 10-year bonds with a stated rate of 3%.The bonds were sold at discount for $191,000,and make semiannual payments on April 30 and October 31.At December 31,2015,Archangel made an adjusting entry to accrue interest at year-end.How much interest expense is recorded at December 31,2015?

Accepted Answer

C) Calculations: $200,000 × 3% × 2/12 = $1,000
($9,000/10) × 2/12 = $150

Question 19

The Cases Company issues $800,000 of 7%,10-year bonds on March 31,2013.The bond pays interest on March 31 and September 30.Which of the following statements is TRUE?

Accepted Answer

When the market rate of interest is higher than the coupon rate (7%), the bonds will issue at a discount. Therefore, if the market rate of interest is 8%, the bonds will issue at a discount.

Question 20

On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were issued at par-for the same amount as the face value.Please provide the journal entry to issue the bonds.
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Accepted Answer

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Quiz 11: Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.The journal entry to record the issuance would include a:

McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.How much cash will McDonald receive for the bonds?

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2012.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.On August 31,2012,how much cash did Blanding pay out to bondholders?

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2013.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.On September 30,2013,how much cash did the company pay out to bondholders?

The Cases Company issues $800,000 of 7%,10-year bonds on March 31,2013.The bond pays interest on March 31 and September 30.Which of the following statements is TRUE?

On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were issued at par-for the same amount as the face value.Please provide the journal entry to issue the bonds. $\begin{array} { | l | l | l | } \hline & & \\\hline & & \\\hline\end{array}$

Quiz 11: Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.The journal entry to record the issuance would include a:

McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.How much cash will McDonald receive for the bonds?

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2012.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.On August 31,2012,how much cash did Blanding pay out to bondholders?

The Amazing Widget Company issues $500,000 of 6%,10-year bonds at 103 on March 31,2013.The bond pays interest on March 31 and September 30.The market rate of interest on the issuance date was 4%.On September 30,2013,how much cash did the company pay out to bondholders?

The Cases Company issues $800,000 of 7%,10-year bonds on March 31,2013.The bond pays interest on March 31 and September 30.Which of the following statements is TRUE?

On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were issued at par-for the same amount as the face value.Please provide the journal entry to issue the bonds. \begin{array} { | l | l | l | } \hline & & \\\hline & & \\\hline\end{array}​​​​

On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were issued at par-for the same amount as the face value.Please provide the journal entry to issue the bonds. $\begin{array} { | l | l | l | } \hline & & \\\hline & & \\\hline\end{array}$