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Exam 14: Long Term Liabilities

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Question 41

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The entry to record the issuance of bonds between interest payment dates will include a debit to Bond Interest Expense.

A) True
B) False

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Question 42

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Weller Co.issued $600,000 of 30-year,8 percent bonds at 106 on one of its semiannual interest dates.The straight-line method of amortization is to be used.What is the total interest cost of the bonds?

A) $1,439,000
B) $1,404,000
C) $1,440,000
D) $1,476,000

E) A) and D)
F) A) and C)

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Question 43

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Under a capital lease,each monthly payment is debited by the lessee to Rent Expense.

The most common type of long-term debt is a

When the board of directors decides to issue bonds,it is necessary to make an entry to record the SEC's authorization of the bond issue.

On December 31,20x5,the balance sheet of the Nowicki Company reported 2,000 bonds outstanding with a face value of $1,000,000 and a related unamortized discount of $70,000.The bonds are convertible at the rate of 25 shares of common stock for each $1,000 bond.On January 1,20x6 ,the bondholders presented $800,000 of the bonds for conversion.The entry to record this conversion contained a credit to Additional Paid-in Capital for $344,000.Calculate the par value per share of the common stock.

A company has $1,606,000 in bonds payable with an unamortized premium of $40,000.If one-fourth of the bonds are converted to common stock,the carrying value of the bonds will decrease by

An adjustment must be made at the end of an accounting period to accrue the interest expense on bonds payable and to amortize any related premium or discount from the last interest payment date to the end of the fiscal year.

The entry to record the issuance of bonds at a premium includes a credit to the Unamortized Bond Premium account.

When determining the value of a bond using present value,what are the two components used in the calculation?

The par value of a bond is equal to its face value.

Which of the following is correct regarding the present value calculations associated with bonds?

Bondholders share voting rights with stockholders.

Under a defined benefit pension plan,

Other postretirement benefits should be expensed

If Rex Corporation issued ten $1,000 bonds issued at 99.75 on the interest date,the entry to record this transaction is :

An unsecured bond is the same as a

The carrying value of a bond issued at a premium is calculated at any given point in time by adding the balance of the unamortized premium to the bond's face value.

When the present value of a bond issue is calculated,both the present value of a single sum and the present value of an annuity must be calculated.

A bond indenture is