Question 1

Part A: Show the effect on the accounting equation of each of the events listed below:
  Part B: For each item listed below,fill in the correct dollar amount,even if it is $0,in the column that represents the financial statement where the item will appear:

Accepted Answer

The answer of Part A: Show the effect on the...

Question 2

Part A: Show the effect on the accounting equation of each of the events listed below:
  Part B: For each item listed below,fill in the correct dollar amount,even if it is $0,in the column that represents the financial statement where the item will appear:

Accepted Answer

The answer of Part A: Show the effect on the...

Question 3

Bondholders are considered owners of a company.

Accepted Answer

Bondholders are considered creditors, not owners. They lend money to the company and in return, receive interest payments and the promise to be paid back their initial investment at a future date. Shareholders are considered owners of a company as they own a portion of the company through their shares.

Question 4

A bond is a written agreement that specifies a company's responsibility to pay interest and to repay the principal to the bondholders at the end of the term of the bond.

Accepted Answer

This statement is true. Bonds are debt securities that represent a loan made by an investor to a borrower, typically a corporation or government entity. The terms of the bond, including the interest rate, maturity date, and repayment of principal, are outlined in a written agreement known as a bond indenture.

Question 5

Calculate the cash received by the issuing company:

Accepted Answer

The answer of Calculate the cash received by the issuing...

Question 6

Secured loans give the bondholders a claim to a specific asset of the company in case of default.

Accepted Answer

Secured loans are backed by a specific asset of the company, which is pledged as collateral. In case of default, the bondholders have the right to claim ownership of the asset to recover their investment.

Question 7

Tina's Wear issued 10-year bonds with a face value of $50,000.The bonds carry a 7% stated interest rate and pay interest once a year.They were issued when the market interest rate was 8% and sold for $46,644.78.
Required:
a.Complete the amortization schedule for the first two years of the bond issue using the effective interest method.
  b.Put an X in the appropriate box to describe how each of these items will behave with each additional interest payment:
  c.Fill in the correct dollar amounts:
At maturity,after the last interest payment has been made,the unamortized discount on the bonds will be $________ and the carrying value of the bonds will be $________.

Accepted Answer

The answer of Tina's Wear issued 10-year bonds with a...

Question 8

Explain the difference between a bond discount and a bond premium.

Accepted Answer

The answer of Explain the difference between a bond discount...

Question 9

At the option of the issuer,callable bonds may be retired prior to maturity for a specified amount of money.

Accepted Answer

Callable bonds can be retired by the issuer before their maturity date by paying a specified amount of money.

Question 10

What is a bond,and why do companies issue bonds?

Accepted Answer

The answer of What is a bond,and why do companies...

Question 11

Explain the difference between a secured bond and a debenture.

Accepted Answer

The answer of Explain the difference between a secured bond...

Question 12

Put an X in the appropriate box to show whether the bond described will be issued at a premium,at a discount,or at par:

Accepted Answer

The answer of Put an X in the appropriate box...

Question 13

On January 1,Micha's Jewelers issued thirty $1,000,ten-year,6% bonds for $29,400.Using straight-line amortization,the interest expense for the first year is ________.
A)$1,800
B)$1,764
C)$1,860
D)$1,824

Accepted Answer

The total discount on the bonds is $600 ($30,000 - $29,400). Using straight-line amortization over 10 years, the annual amortization is $60. The annual interest payment is $1,800 (6% of $30,000). Therefore, the interest expense for the first year is $1,860 ($1,800 + $60).

Question 14

Zero-interest (zero-coupon)bonds do not provide bondholders with interest payments.Instead,the face value of the bond is paid to the owner at the bond's maturity date.

Accepted Answer

Zero-interest bonds do not pay interest, but instead provide the owner with the full face value of the bond at maturity.

Question 15

Calculate the cash received by the issuing company:

Accepted Answer

The answer of Calculate the cash received by the issuing...

Question 16

Callable bonds give the bondholder the option of exchanging the bond for common stock.

Accepted Answer

Callable bonds give the issuer the right to redeem the bond before its maturity date, not the option for bondholders to exchange it for stock.

Question 17

Calculate the proceeds for each of the following bond issues AND put an X in the appropriate box to show if the bonds sell at a premium,at a discount,or at par:

Accepted Answer

The answer of Calculate the proceeds for each of the...

Question 18

Convertible bonds give the bondholder the option of exchanging the bond for common stock.

Accepted Answer

Convertible bonds allow the bondholder to convert their bond into a predetermined number of common stock shares at any time before the bond's maturity.

Question 19

Calculate the proceeds for each of the following bond issues AND put an X in the appropriate box to show if the bonds sell at a premium,at a discount,or at par:

Accepted Answer

The answer of Calculate the proceeds for each of the...

Question 20

$100,000 of 9%,10-year bonds were issued for $106,710 when the market rate of interest was 8%.The bonds pay interest once a year.
1.How much interest will be paid in cash in the first year?
2.How much interest expense will be reported for the first year,assuming the company uses effective-interest amortization?
3.How much interest expense will be reported for the first year,assuming the company uses straight-line amortization?

Accepted Answer

The answer of $100,000 of 9%,10-year bonds were issued for...

Quiz 7: Accounting for Liabilities

Part A: Show the effect on the accounting equation of each of the events listed below: Part B: For each item listed below,fill in the correct dollar amount,even if it is $0,in the column that represents the financial statement where the item will appear:

Part A: Show the effect on the accounting equation of each of the events listed below: Part B: For each item listed below,fill in the correct dollar amount,even if it is $0,in the column that represents the financial statement where the item will appear:

Bondholders are considered owners of a company.

A bond is a written agreement that specifies a company's responsibility to pay interest and to repay the principal to the bondholders at the end of the term of the bond.

Calculate the cash received by the issuing company:

Secured loans give the bondholders a claim to a specific asset of the company in case of default.

Explain the difference between a bond discount and a bond premium.

At the option of the issuer,callable bonds may be retired prior to maturity for a specified amount of money.

What is a bond,and why do companies issue bonds?

Explain the difference between a secured bond and a debenture.

Put an X in the appropriate box to show whether the bond described will be issued at a premium,at a discount,or at par:

On January 1,Micha's Jewelers issued thirty $1,000,ten-year,6% bonds for $29,400.Using straight-line amortization,the interest expense for the first year is ________.

Zero-interest (zero-coupon)bonds do not provide bondholders with interest payments.Instead,the face value of the bond is paid to the owner at the bond's maturity date.

Calculate the cash received by the issuing company:

Callable bonds give the bondholder the option of exchanging the bond for common stock.

Calculate the proceeds for each of the following bond issues AND put an X in the appropriate box to show if the bonds sell at a premium,at a discount,or at par:

Convertible bonds give the bondholder the option of exchanging the bond for common stock.

Calculate the proceeds for each of the following bond issues AND put an X in the appropriate box to show if the bonds sell at a premium,at a discount,or at par: