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Exam 22: Long-Term Bonds

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Question 51

Multiple Choice

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Bonds with a face value of $200,000 were issued at 103. The entry to record the issuance will include a credit to the Bonds Payable account for

A) $206,000.
B) $200,000.
C) $103,000.
D) $230,000.

E) A) and B)
F) B) and C)

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Question 52

Multiple Choice

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Bonds with a face value of $400,000 were issued at 98. The entry to record the issuance will include a credit to the Bonds Payable account for

A) $408,000.
B) $392,000.
C) $400,000.
D) $398,000.

E) A) and C)
F) A) and B)

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Question 53

Multiple Choice

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A corporation paid $104,000 to retire bonds with a face value of $100,000 and an unamortized discount balance of $3,000. The entry to record the early retirement of the bonds will include the recognition of a loss of

Match the following definitions with the proper terms.

A planned fund established to accumulate assets to pay off bonds when they mature is called a bond ____________________ fund investment.

Bond interest expense usually appears in the _____________________________ section of the income statement.

Coupon bonds are often referred to as ____________________ bonds.

Twee Corporation creates a bond sinking fund on July 1, 2013, the first day of its fiscal year in preparation of payment of principal of $300,000 due in six years. Twee makes a $50,000 cash deposit into the account and invests it in an oil stock fund. During the year, $4,400 is earned on this investment. Fund administrative expenses for this fund amount to $50. Record the journal entry for the creation of this fund, the earnings on the investment, and for the required amount of investment into the sinking fund at the beginning of the second year.

In the interest formula (I = Prt) the Prt stands for __________________________.

The Morris Corporation has outstanding $300,000 face value of 12 percent bonds payable dated January 1, 2013, and maturing 10 years later on January 1, 2023. The corporation is required under the bond contract to transfer $30,000 each year to a bond sinking fund investment. The cash in the sinking fund investment is invested to earn interest. Record the following entries on page 6 of a general journal. Omit descriptions. 2013 Dec. 31 Made the annual deposit to the bond sinking fund investment 2014 Dec. 31 Recorded the $\$ 3,750$ earnings on the bond sinking fund investments for the past year 31 Made the annual deposit to the bond sinking fund investment 2015 Dec. 31 Recorded the $\$ 6,600$ earnings on the bond sinking fund investments for the past year 31 Made the annual deposit to the bond sinking fund investment 2023 Jan. 1 Paid the amount due to retire the bonds. Assume that the balance of the Bond Sinking Fund Investment account is $\$ 300,000$