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Question;a141. Presented here is a partial amortization;schedule for Roseland Company who sold $200,000, five year 10% bonds on January;1, 2012 for $208,000 and uses annual straight-line amortization.;BOND;AMORTIZATION SCHEDULE;Interest Period;Interest Paid;Interest Expense;Premium Amortization;Unamortized Premium;Bond Carrying Value;January 1, 2012;$8,000;$208,000;January 1, 2013;(i);(ii);(iii);(iv);(v);Which of the following;amounts should be shown in cell (v)?;a. $209,600;b. $208,800;c. $206,400;d. $207,200;a142. On January 1, Health Corporation issues $3,000,000, 5-year, 12%;bonds at 96 with interest payable on July 1 and January 1. The entry on;December 31 to record accrued bond interest and the amortization of bond;discount using the straight-line method will include a;a. debit;to Interest Expense, $180,000.;b. debit;to Interest Expense, $360,000.;c. credit;to Discount on Bonds Payable, $12,000.;d. credit;to Discount on Bonds Payable, $24,000.;143. On January 1, 2012;$2,000,000, 10-year, 10% bonds, were issued for $1,940,000. Interest is paid;annually on January 1. If the issuing corporation uses the straight-line method;to amortize discount on bonds payable, the monthly amortization amount is;a. $19,400.;b. $6,000.;c. $1,616.;d. $500.;144. A corporation issues $500,000, 10%, 5-year;bonds on January 1, 2012, for $479,000. Interest is paid annually on January 1.;If the corporation uses the straight-line method of amortization of bond;discount, the amount of bond interest expense to be recognized in December 31, 2012?s;adjusting entry is;a. $54,200.;b. $50,000.;c. $45,800.;d. $4,200.;a145. Stable Company issued;$600,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming;straight-line amortization, what is the total interest cost of the bonds?;a. $180,000;b. $192,000;c. $168,000;d. $174,000;a146. Pakota Company issued;$800,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming;straight-line amortization, what is the carrying value of the bonds after one;year?;a. $784,000;b. $785,600;c. $787,200;d. $790,400;a147. Trendy;Company issued $600,000 of 8%, 5-year bonds at 106. Assuming straight-line;amortization and annual interest payments, how much bond interest expense is;recorded on the next interest date?;a. $48,000;b. $55,200;c. $40,800;d. $7,200;a148. Dart;Company issued $600,000 of 8%, 5-year bonds at 106, with interest paid;annually. Assuming straight-line amortization, what is the carrying value of;the bonds after one year?;a. $636,000;b. $632,400;c. $628,800;d. $639,600;a149. On;January 1, 2012, $3,000,000, 5-year, 10% bonds, were issued for $2,910,000.;Interest is paid semiannually on January 1 and July 1. If the issuing;corporation uses the straight-line method to amortize discount on bonds;payable, the monthly amortization amount is;a. $17,424.;b. $18,000.;c. $1,452.;d. $1,500.;a150. A;corporation issues $500,000, 10%, 5-year bonds on January 1, 2012 for $479,000.;Interest is paid semiannually on January 1 and July 1. If the corporation uses;the straight- line method of amortization of bond discount, the amount of bond;interest expense to be recognized on July 1, 2012 is;a. $52,100.;b. $25,000.;c. $27,100.;d. $22,900.;a151. Over;the term of the bonds, the balance in the Discount on Bonds Payable account;will;a. fluctuate up and down if the market is;volatile.;b. decrease.;c. increase.;d. be unaffected until the bonds mature.;a152. Bond discount should be;amortized to comply with;a. the historical cost principle.;b. the matching principle.;c. the revenue recognition principle.;d. conservatism.;a153. If bonds have been issued at;a discount, over the life of the bonds, the;a. carrying value of the bonds will decrease.;b. carrying value of the bonds will increase.;c. interestexpense;will increase, if the discount is being;amortized on a straight-line basis.;d. unamortized discount will increase.;154. The market value;(present value) of a bond is a function of all of the following except the;a. dollar;amounts to be received.;b. length;of time until the amounts are received.;c. market;rate of interest.;d. length of time until the bond;is sold.;155. On the date of issue, Chudzick Corporation sells $5 million of5-year bonds at 97. The entry to record the sale will include the;following debits and credits;Bonds;Payable Discount;on Bonds Payable;a. $4,850,000 Cr. $0;Dr.;b. $5,000,000 Cr. $150,000;Dr.;c. $5,000,000 Cr. $1,250,000;Dr.;d. $5,000,000 Cr. $15,000;Dr.;156. The market rate of;interest for a bond issue which sells for more than its face value is;a. independent;of the interest rate stated on the bond.;b. higher;than the interest rate stated on the bond.;c. equal;to the interest rate stated on the bond.;d. less;than the interest rate stated on the bond.;157. When a company;retires bonds before maturity, the gain or loss on redemption is the difference;between the cash paid and the;a. carrying;value of the bonds.;b. face;value of the bonds.;c. original;selling price of the bonds.;d. maturity value of the bonds.;158. Aire Corporation;retires its bonds at 106 on January 1, following the payment of semi-annual;interest. The face value of the bonds is $600,000. The carrying value of the;bonds at the redemption date is $631,500. The entry to record the redemption;will include a;a. credit;of $31,500 to Loss on Bond Redemption.;b. debit;of $36,000 to Premium on Bonds Payable.;c. credit;of $5,250 to Gain on Bond Redemption.;d. debit;of $31,500 to Premium on Bonds Payable.;159. Each payment on a;mortgage note payable consists of;a. interest;on the original balance of the loan.;b. reduction;of loan principal only.;c. interest;on the original balance of the loan and reduction of loan principal.;d. interest on the unpaid balance;of the loan and reduction of loan principal.;160. Which of the;following is not a condition under;which the lessee must record the lease of an asset?;a. The;lease contains a bargain purchase option.;b. The;lease transfers ownership of the property to the lessee.;c. The;lease term is equal to 60% of the economic life of the lease property.;d. The;present value of the lease payments is 90% of the fair market value of the;leased property.;161. The lessee must;record a lease as an asset if the lease;a. transfers;ownership of the property to the lessor.;b. contains;a purchase option.;c. term;is 75% or more of the useful life of the leased property.;d. payments equal or exceed 90%;of the fair market value of the leased property.;162. Baker Electronics;Company issues a $1,000,000, 10%, 20-year mortgage note on January 1. The terms;provide for semiannual installment payments, exclusive of real estate taxes and;insurance, of $58,276. After the first installment payment, the principal;balance is;a. $1,000,000.;b. $983,034.;c. $991,724.;d. $779,125.;163. The;debt to total assets ratio is computed by dividing;a. long-term;liabilities by total assets.;b. total;debt by total assets.;c. total;assets by total debt.;d. total assets by long-term;liabilities.;a164. The;market price of a bond is the;a. present;value of its principal amount at maturity plus the present value of all future;interest payments.;b. principal;amount plus the present value of all future interest payments.;c. principal;amount plus all future interest payments.;d. present;value of its principal amount only.;165. Liabilities are generally presented in;a. alphabetical;order.;b. order;of liquidity.;c. maturity;date order.;d. order;of magnitude.;166. Preferred stock that is required to be;redeemed at a specific point in time in the future is reported;a. as;equity.;b. as;debt.;c. as;debt or equity depending on the circumstances.;d. in;a "mezzanine" area between debt and equity.;167. The effective-interest method for;amortization of bond discounts is required under;a. GAAP;only.;b. IFRS;only.;c. Both;GAAP and IFRS.;d. Neither;GAAP or IFRS.;169. Under IFRS, companies do not use a;a. discount;account.;b. premium;account.;c. bonds;payable account.;d. discount;or premium account.

 

Paper#45015 | Written in 18-Jul-2015

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