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Question;61. When authorizing bonds to be issued, the;board of directors does not specify;thea. total number of bonds authorized to be sold.b. contractual interest rate.c. selling price.d. total face value of the bonds. 62. The following exhibit is for Kmart bonds. Bonds Close Yield Volume Net Change Kmart;8 3/8 17 100? 8.4 35 +7/8The contractual interest rate of the K;mart bonds isa. greater than the market interest rate.b. less than the market interest rate.c. equal to the market interest rate.d. not determinable. 63. The following exhibit is for Kmart bonds. Bonds Close Yield Volume Net Change Kmart;8 3/8 17 100? 8.4 35 +7/8On the day of trading referred to;above,a. no Kmart bonds were traded.b. bonds with market prices of $3,500 were;traded.c. at closing, the selling price of the bond was;higher than the previous day's price.d. the bond sold for $100.25 64. A $1,000 face value bond with a quoted;price of 97 is selling fora. $1,000.b. $970.c. $907.d. $97. 65. A bond with a face value of $200,000 and a;quoted price of 102? has a selling price ofa. $240,450.b. $204,050.c. $200,450.d. $204,500.;66. Premium on Bonds;Payablea. has;a debit balance.b. is;a contra account.c. is;considered to be a reduction in the cost of borrowing.d. is deducted from bonds payable;on the balance sheet. 67. If the market interest rate is greater than;the contractual interest rate, bonds will sella. at a premium.b. at face value.c. at a discount.d. only after the stated interest rate is;increased. 68. On January 1, 2012, Carter Corporation;issued $5,000,000, 10-year, 8% bonds at 103. Interest is payable semiannually;on January 1 and July 1. The journal entry to record this transaction on;January 1, 2010 isa. Cash....................................................................................... 5,000,000 Bonds;Payable.............................................................. 5,000,000b. Cash....................................................................................... 5,150,000 Bonds;Payable.............................................................. 5,150,000c. Premium;on Bonds Payable.................................................. 150,000 Cash....................................................................................... 5,000,000 Bonds;Payable.............................................................. 5,150,000d. Cash....................................................................................... 5,150,000 Bonds;Payable.............................................................. 5,000,000 Premium;on Bonds Payable......................................... 150,000: 69. The total cost of borrowing is increased;only if thea. bonds were issued at a premium.b. bonds were issued at a discount.c. bonds were sold at face value.d. market interest rate is less than the;contractual interest rate on that date. 70. If the market interest rate is 10%, a;$10,000, 12%, 10-year bond, that pays interest semiannually would sell at an;amounta. less than face value.b. equal to face value.c. greater than face value.d. that cannot be determined.;71. The present value of a $10,000, 5-year;bond, will be less than $10,000 if thea. contractual interest rate is less than the;market interest rate.b. contractual interest rate is greater than the;market interest rate.c. bond is convertible.d. contractual interest rate is equal to the;market interest rate. 72. Hernandez Corporation issues 3,000;10-year, 8%, $1,000 bonds dated January 1, 2012, at 98. The journal entry to;record the issuance will show aa. debit to Cash of $3,000,000.b. credit to Discount on Bonds Payable for $60,000.c. credit to Bonds Payable for $3,040,000.d. debit to Cash for $2,960,000. 73. The market interest rate is often called;thea. stated rate.b. effective rate.c. coupon rate.d. contractual rate. 74. If bonds are issued at a discount, it means;that thea. financial strength of the issuer is suspect.b. market interest rate is higher than the;contractual interest rate.c. market interest rate is lower than the;contractual interest rate.d. bondholder will receive effectively less;interest than the contractual interest rate. 75. Each of the;following accounts is reported as long-term liabilities excepta. Interest;Payable.b. Bonds;Payable.c. Discount;on Bonds Payable.d. Premium on Bonds Payable. 76. The statement that "Bond prices vary;inversely with changes in the market interest rate" means that if thea. market interest rate increases, the;contractual interest rate will decrease.b. contractual interest rate increases, then;bond prices will go down.c. market interest rate decreases, then bond;prices will go up.d. contractual interest rate increases, the;market interest rate will decrease.;77. The carrying value of bonds will equal the;market pricea. at the close of every trading day.b. at the end of the fiscal period.c. on the date of issuance.d. every six months on the date interest is;paid. 78. The sale of bonds above face valuea. is a rare occurrence.b. will cause the total cost of borrowing to be;less than the bond interest paid.c. will cause the total cost of borrowing to be;more than the bond interest paid.d. will have no net effect on Interest Expense;by the time the bonds mature. 79. In the balance sheet, the account, Premium;on Bonds Payable, isa. added to bonds payable.b. deducted from bonds payable.c. classified as a stockholders' equity account.d. classified as a revenue account. 80. Four thousand bonds with a face value of;$1,000 each, are sold at 104. The entry to record the issuance isa. Cash...................................................................................... 4,160,000 Bonds;Payable............................................................. 4,160,000b. Cash...................................................................................... 4,000,000 Premium;on Bonds Payable................................................. 160,000 Bonds;Payable............................................................. 4,160,000c. Cash...................................................................................... 4,160,000 Premium;on Bonds Payable........................................ 160,000 Bonds;Payable............................................................. 4,000,000d. Cash...................................................................................... 4,160,000 Discount;on Bonds Payable........................................ 160,000 Bonds;Payable............................................................. 4,000,000 81. Bond interest paid;isa. higher;when bonds sell at a discount.b. lower;when bonds sell at a premium.c. the;same whether bonds sell at a discount or a premium.d. higher when bonds sell at a;discount and lower when bonds sell at a premium.;82. Ward Corporation issues 5,000, 10-year, 8%;$1,000 bonds dated January 1, 2012, at 104. The journal entry to record the;issuance will show aa. debit to Cash of $5,000,000.b. credit to Premium on Bonds Payable for $200,000.c. credit to Bonds Payable for $5,040,000.d. credit;to Cash for $5,020,000. 83. Lake;Company received proceeds of $188,500 on 10-year, 8% bonds issued on January 1;2011. The bonds had a face value of $200,000, pay interest semi-annually on;June 30 and December 31, and have a call price of 101. Lake uses the;straight-line method of amortization.What is the amount of interest Lake;must pay the bondholders in 2011?a. $15,080b. $16,000c. $17,150d. $14,850a84. Hooke Company;received proceeds of $188,500 on 10-year, 8% bonds issued on January 1, 2011.;The bonds had a face value of $200,000, pay interest semi-annually on June 30;and December 31, and have a call price of 101. Hooke uses the straight-line;method of amortization.What is the amount of interest expense Hooke will show with relation;to these bonds for the year ended December 31, 2012?a. $16,000b. $15,080c. $17,150d. $14,850 a85. Jarmin Company received proceeds of $188,500 on 10-year, 8%;bonds issued on January 1, 2011. The bonds had a face value of $200,000, pay;interest semi-annually on June 30 and December 31, and have a call price of;101. Jarmin uses the straight-line method of amortization.What is the carrying value of the bonds on January 1, 2013?a. $200,000b. $190,800;c. $197,700="msonormal">

 

Paper#44936 | Written in 18-Jul-2015

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