Question 1

Match each description below to the appropriate term (a-g).
-On the first day of the fiscal year, a company issues a $1,000,000, 7%, 5-year bond that pays semiannual interest of $35,000 ($1,000,000 × 7% × 1/2), receiving cash of $884,171. Journalize the entry to record the issuance of the bonds.
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

The answer of Match each description below to the appropriate...

Question 2

On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $530,000. Journalize the entry to record the issuance of the bonds.

Accepted Answer

The answer of On the first day of the fiscal...

Question 3

Match each description below to the appropriate term (a-g).​
-The contract between bond issuer and bond purchaser
A)contract rate
B)effective rate
C)bond discount
D)bond premium
E)bond
F)bond indenture
G)principal

Accepted Answer

A bond indenture is a legal document containing the terms and conditions of the bond, such as the interest rate, maturity date, and payment schedule.

Question 4

On the first day of the fiscal year, a company issues an $800,000, 6%, 5-year bond that pays semiannual interest of $24,000 ($800,000 × 6% × 1/2), receiving cash of $690,960. Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method.

Accepted Answer

The answer of On the first day of the fiscal...

Question 5

Match each description below to the appropriate term (a-g).
-On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $437,740. Journalize the entry to record the issuance of the bonds.
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

The answer of Match each description below to the appropriate...

Question 6

On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $520,000. Journalize the entry to record the first interest payment and amortization of premium using the straight-line method.

Accepted Answer

The answer of On the first day of the fiscal...

Question 7

On the first day of the fiscal year, a company issues a $1,000,000, 7%, 5-year bond that pays semiannual interest of $35,000 ($1,000,000 × 7% × 1/2), receiving cash of $884,171. Journalize the first interest payment and the amortization of the related bond discount using the straight-line method. Round answers to the nearest dollar.

Accepted Answer

The answer of On the first day of the fiscal...

Question 8

Match each description below to the appropriate term (a-g).
-Allows the bond holder to exchange bond for shares of stock
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

A convertible bond allows the bondholder to exchange the bond for shares of stock.

Question 9

Match each description below to the appropriate term (a-g).​
-The rate printed on the bond certificate
A)contract rate
B)effective rate
C)bond discount
D)bond premium
E)bond
F)bond indenture
G)principal

Accepted Answer

The rate printed on the bond certificate is referred to as the contract rate.

Question 10

Match each description below to the appropriate term (a-g).
-Allows the issuer to redeem bonds before maturity date
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

A callable bond allows the issuer to redeem bonds before the maturity date. The other options in the list do not necessarily relate to this feature.

Question 11

Match each description below to the appropriate term (a-g).
-The principal of the bond issue is paid back in installments
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

Serial bond is a type of bond where the principal is repaid in installments.

Question 12

Match each description below to the appropriate term (a-g).​
-If the contract rate exceeds the effective rate
A)contract rate
B)effective rate
C)bond discount
D)bond premium
E)bond
F)bond indenture
G)principal

Accepted Answer

When the contract rate exceeds the effective rate, it means that the bond is being issued at a premium. This is because the interest rate promised to investors (contract rate) is higher than the current market interest rate (effective rate), making the bond more valuable to investors.

Question 13

Match each description below to the appropriate term (a-g).
-The entire principal of the bond is paid back on maturity date
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

Term bonds are structured so that the entire principal amount is paid back at the bond's maturity date.

Question 14

Match each description below to the appropriate term (a-g).​
-The return required by the market on the day of issuance
A)contract rate
B)effective rate
C)bond discount
D)bond premium
E)bond
F)bond indenture
G)principal

Accepted Answer

The term that matches this description is the Effective rate, which is the actual return that investors will receive on a bond, taking into account any premiums or discounts.

Question 15

Match each description below to the appropriate term (a-g).
-The legal contract between issuer and bond holder
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

The legal contract between the issuer and bondholder is called an indenture.

Question 16

Match each description below to the appropriate term (a-g).​
-If the contract rate is less than the effective rate
A)contract rate
B)effective rate
C)bond discount
D)bond premium
E)bond
F)bond indenture
G)principal

Accepted Answer

A bond discount occurs when the contract rate (the interest rate stated on the bond) is less than the effective rate (the market interest rate at the time the bond is issued).

Question 17

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000. Journalize the redemption of the bonds.

Accepted Answer

The answer of A $375,000 bond issue on which there...

Question 18

Match each description below to the appropriate term (a-g).
-The book value of bonds payable
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

Book value refers to the carrying amount of the bond, which may differ from the face value (B). Callable bonds (C) allow the issuer to redeem the bond before maturity. An indenture (D) is a legal agreement between the issuer and bondholders that outlines the terms of the bond. Term bonds (E) mature on a specific date, while serial bonds (G) mature in installments over time. Convertible bonds (F) can be converted into common stock at the option of the bondholder. None of these terms directly relate to book value.

Question 19

Match each description below to the appropriate term (a-g).
-The value of a bond stated on the bond certificate
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond

Accepted Answer

The value of a bond stated on the bond certificate is the face value.

Question 20

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000. Journalize the redemption of the bonds.

Accepted Answer

The answer of A $500,000 bond issue on which there...

Quiz 11: Liabilities: Bonds Payable

On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $530,000. Journalize the entry to record the issuance of the bonds.

Match each description below to the appropriate term (a-g). -The contract between bond issuer and bond purchaser A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $520,000. Journalize the entry to record the first interest payment and amortization of premium using the straight-line method.

Match each description below to the appropriate term (a-g). -Allows the bond holder to exchange bond for shares of stock A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -The rate printed on the bond certificate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -Allows the issuer to redeem bonds before maturity date A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -The principal of the bond issue is paid back in installments A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -If the contract rate exceeds the effective rate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -The entire principal of the bond is paid back on maturity date A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -The return required by the market on the day of issuance A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -The legal contract between issuer and bond holder A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -If the contract rate is less than the effective rate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000. Journalize the redemption of the bonds.

Match each description below to the appropriate term (a-g). -The book value of bonds payable A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -The value of a bond stated on the bond certificate A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000. Journalize the redemption of the bonds.

Quiz 11: Liabilities: Bonds Payable

On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $530,000. Journalize the entry to record the issuance of the bonds.

Match each description below to the appropriate term (a-g).​ -The contract between bond issuer and bond purchaser A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

On the first day of the fiscal year, a company issues a $500,000, 8%, 10-year bond that pays semiannual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $520,000. Journalize the entry to record the first interest payment and amortization of premium using the straight-line method.

Match each description below to the appropriate term (a-g). -Allows the bond holder to exchange bond for shares of stock A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g).​ -The rate printed on the bond certificate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -Allows the issuer to redeem bonds before maturity date A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -The principal of the bond issue is paid back in installments A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g).​ -If the contract rate exceeds the effective rate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -The entire principal of the bond is paid back on maturity date A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g).​ -The return required by the market on the day of issuance A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -The legal contract between issuer and bond holder A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g).​ -If the contract rate is less than the effective rate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000. Journalize the redemption of the bonds.

Match each description below to the appropriate term (a-g). -The book value of bonds payable A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

Match each description below to the appropriate term (a-g). -The value of a bond stated on the bond certificate A)carrying amount B)face value C)callable bond D)indenture E)term bond F)convertible bond G)serial bond

A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000. Journalize the redemption of the bonds.

Match each description below to the appropriate term (a-g). -The contract between bond issuer and bond purchaser A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -The rate printed on the bond certificate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -If the contract rate exceeds the effective rate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -The return required by the market on the day of issuance A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal

Match each description below to the appropriate term (a-g). -If the contract rate is less than the effective rate A)contract rate B)effective rate C)bond discount D)bond premium E)bond F)bond indenture G)principal