Question 1

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100.

-Required: What amount of interest expense on these bonds would Morton Sales Co. report in its 2018 income statement?

Accepted Answer

The answer of On January 1, 2018, Morton Sales Co....

Question 2

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100.

-Required: What was the annual effective interest rate in the market when the bonds were issued?

Accepted Answer

The answer of On January 1, 2018, Morton Sales Co....

Question 3

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Market rate higher than stated rate

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 4

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Debenture bond

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 5

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100.

-Required: What total interest expense will Morton Sales Co. report over the 10-year life of these bonds?

Accepted Answer

The answer of On January 1, 2018, Morton Sales Co....

Question 6

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Stated rate higher than market rate

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 7

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Coupon bonds

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 8

On February 1, 2018, Nell purchased $600,000 in zero-coupon bonds that mature on February 1, 2038. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 12%.
Required: Calculate the price Nell paid for the bonds.

Accepted Answer

The answer of On February 1, 2018, Nell purchased $600,000...

Question 9

Determine the price of a $500,000 bond issue under each of the following independent assumptions:

Accepted Answer

The answer of Determine the price of a $500,000 bond...

Question 10

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Subordinated debenture

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 11

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Face amount times stated rate

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 12

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Promises made to bondholders

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 13

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100.

-Required: What will Morton Sales Co. report on these bonds in its December 31, 2018, balance sheet?

Accepted Answer

The answer of On January 1, 2018, Morton Sales Co....

Question 14

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 15

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Registered bonds

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 16

On January 1, 2018, Bishop Company issued 10% bonds dated January 1, 2018, with a face amount of $20 million. The bonds mature in 2027 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31.
Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record the bond issuance by Bishop on January 1, 2018.
3. Prepare the journal entry to record interest on June 30, 2018, using the effective interest method.
4. Prepare the journal entry to record interest on December 31, 2018, using the effective interest method.

Accepted Answer

The answer of On January 1, 2018, Bishop Company issued...

Question 17

On May 1, 2018, Joe purchased $200,000 in zero-coupon bonds that mature on May 1, 2038. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 9%. Interest compounds annually.
Required: Calculate the price Joe paid for the bonds.

Accepted Answer

The answer of On May 1, 2018, Joe purchased $200,000...

Question 18

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100.

-Required: How much interest will Morton Sales Co. pay on these bonds in 2018?

Accepted Answer

The answer of On January 1, 2018, Morton Sales Co....

Question 19

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Mortgage bond

Accepted Answer

The answer of Listed below are several terms and phrases...

Question 20

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.
-Balance times effective rate

Accepted Answer

The answer of Listed below are several terms and phrases...

Quiz 14: Bonds and Long-Term Notes

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100. -Required: What amount of interest expense on these bonds would Morton Sales Co. report in its 2018 income statement?

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100. -Required: What was the annual effective interest rate in the market when the bonds were issued?

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Market rate higher than stated rate

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Debenture bond

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100. -Required: What total interest expense will Morton Sales Co. report over the 10-year life of these bonds?

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Stated rate higher than market rate

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Coupon bonds

On February 1, 2018, Nell purchased $600,000 in zero-coupon bonds that mature on February 1, 2038. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 12%. Required: Calculate the price Nell paid for the bonds.

Determine the price of a $500,000 bond issue under each of the following independent assumptions:

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Subordinated debenture

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Face amount times stated rate

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Promises made to bondholders

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100. -Required: What will Morton Sales Co. report on these bonds in its December 31, 2018, balance sheet?

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

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Registered bonds

On May 1, 2018, Joe purchased $200,000 in zero-coupon bonds that mature on May 1, 2038. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 9%. Interest compounds annually. Required: Calculate the price Joe paid for the bonds.

On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6 million for cash. The bonds mature in 10 years and were issued at a price of $3,050,100. -Required: How much interest will Morton Sales Co. pay on these bonds in 2018?

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Mortgage bond

Listed below are several terms and phrases associated with long-term debt. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. -Balance times effective rate