ACCT 211 Read & Interact Chapter 10 Accounting for Long-Term Liabilities solutions complete answers

ACCT 211 Read & Interact Chapter 10 Accounting for Long-Term Liabilities solutions complete answers 

 

A company issues $100,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually. The bonds are issued when the market rate is 8%. The present value tables indicate the present value factor of an annuity for 3% at 10 periods is 8.5302; and for 4% at 10 periods is 8.1109. To find the present value of the interest payments, multiply _______ by the present value factor _________.

 

When the market rate is 12%, a company issues $50,000 of 9%, 10-year bonds and pay interest semiannually. When the bonds mature, the issuer records its payment of principal with a debit to _______ in the amount of _______.

 

A(n) _______ is a legal agreement that helps to protect a lender if a borrower does not make required payments on notes or bonds. This agreement gives the lender the right to be paid from the cash proceeds of the sale of the borrower's assets, as identified in the agreement.

 

A company issues $100,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $103,000 for the bonds, the issuer will record the sale with a (debit/credit) ______ to Bond Payable in the amount of _______.

 

A company issued $50,000 of 8%, 10-year bonds on January 1. The bonds pay semi annual interest. The present value factor of a single amount of 20 periods at 8% is 0.2145.The present value of 10 periods at 4% is 0.6756. The present value of 20 periods at 4% is 0.4564. Determine the present value of the par value of the bonds.

 

When the market rate is 8%, a company issues $50,000 of 9%, 10-year bonds and pay interest semiannually for a selling price of $60,000. When the bonds mature, the issuer records its payment of principal with a (debit/credit)   to Bonds Payable in the amount of $ .

 

A company issues $80,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $84,000 for the bonds, the issuer will record the sale with a (debit/credit)  _ to (Discount/Premium)  _ on Bonds Payable in the amount of $4,000.

 

When the market rate is 10%, a company issues $60,000 of 12%, 10-year bonds and pay interest semiannually. When the bonds mature, the issuer records its payment of principal with a (debit/credit)   to Cash in the amount of $ .

 

The ________ rate is the interest rate specified, sometimes referred to as the coupon rate, stated rate, or nominal rate.

 

A company issues $90,000 of 5%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $95,000 for the bonds, the issuer will record the sale with a (debit/credit) ______ to (Discount/Premium) ______ on Bonds Payable in the amount of $5,000.

 

The legal contract between the bondholders and the issuer is called the bond ______. 

 

The ________ value of a bond, also called the face amount or face value, is paid at a stated future date, known as the bond's maturity date.

 

Winn Co. signs a 60 day note payable for a $15,000 copy machine with an interest rate of 8%. Winn will record total interest expense of

 

Since bond market values are expressed as a percentage of their bond value, a $1,000 bond that is sold at 93 will trade at $ .

 

The legal contract between the bondholders and the issuer is called the bond  .

 

The par value of a bond, also called the face value, is paid at a stated future date, known as the bond's   date.

 

Sheldon has a $15,000 liability for a machine that has an interest rate of 10%. The interest expense is

 

Sheldon has a $15,000 lease liability for a machine has an interest rate of 10%. The interest expense on the lease is

 

A finance lease is a long-term lease which meets one or more of the following criteria:

 

Winn Co. enters into a 6-year finance lease for a copy machine with an interest rate of 8% (the present value of its $1,298 annual lease payments is $6,000). Winn will record the first-period lease payment with a debit to Right-of-Use Asset in the amount of?

 

Typical examples of asset's leased as a finance lease include all of the following except:

 

The _____ is the owner of a lease and the _____ is the tenant of a lease.

 

A company issues $100,000 of 12%, 6-year bonds that pay interest semiannually. The bonds are issued when the market rate is 10%. The present value of an annuity table indicates that the present value factor for 5% at 12 periods is 8.8633. The present value of 1 table indicates that the present value factor for 5% at 12 periods is 0.5568. The present value of the price of the bond rounded to the nearest whole dollar is $      .

 

_______ bonds (and notes) have specific assets of the issuer pledged (or mortgaged) as collateral.

 

Which of the following statements is not an advantage of bond financing?

 

A company issues $100,000 of 5%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with a debit to     in the amount of $   .

 

A company issues $75,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $69,000 for the bonds, the issuer will record the sale with a debit to which of the following accounts?

 

When the contract rate of the bonds is higher than the market rate, the bond sells at a higher price than par value. The amount by which the bond price exceeds par value is the ___ on bonds.

 

A company issues $50,000 of 5%, 10-year bonds dated January 1 and pay interest semiannually on June 30 and December 31 each year. The bonds are sold for $48,000. Using the straight-line amortization method, the company will amortize the discount by $__ on each semiannual interest payment.

 

The legal document that describes the rights and obligations of both the bondholders and the issuers is called the bond _____.

 

A company issues $60,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $62,000 for the bonds, the premium on bonds payable will __ total interest expense recognized over the life of the bond by $____.

 

A company issues $90,000 of 5%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $95,000 for the bond, the issuer will record the sale with a     to     on bonds payable in the amount of $5,000.

 

Total bond interest     is the sum of the interest payments plus the bond discount.

 

Which of the following are true of amortizing a premium bond using the effective interest amortizing method:

 

The bond carrying value can be determined by which of the following formulas?

 

A company issues $500,000 of 6%, 10-year bonds dated January 1, 2017 that mature on December 31, 2026. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with which of the following entries?

 

A company borrows $60,000 by signing a $60,000, 8%, 6-year note that requires equal payments of $12,979 at the end of each year. The first payment will record interest expense of $4,800 and will reduce principal by $ ___.

 

The     bond amortization method allocates an equal portion of the total bond interest expense to each interest period.

 

Bond market values are expressed as a percentage of their par (face) value. For example, a company's bonds might be reading at 103, meaning that they can be bought or sold for ___ of their par value.

 

When the market rate is 8%, a company issues $50,000 of 9%, 10-year bonds dated January 1, 2017, that mature on December 31, 2026, and pay interest semiannually for a selling price of $60,000. When the bonds mature, the issuer records its payment of principal with a     to Bonds Payable in the amount of     .

 

Which of the following statements are disadvantages of bond financing? (Check all that apply.)

 

A company issues $400,000 of 8%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with a ________ to Bonds Payable in the amount of _______.

 

Lyle Co. borrowed $20,000 from First Bank by signing a written promise to pay a definite sum of money on a specific future date. Lyle will record this in the general ledger as a(n) ___ payable.

 

A company borrows $50,000 by signing a $50,000, 6%, 5-year note that requires equal payments of $11,870 at the end of each year. The first payment will record interest expense of:

 

A company borrows $70,000 by signing a $70,000 8%, 6-year note that requires equal payments of $15,142 at the end of each year. The first payment will record interest expense of $5,600 and will reduce principal by $9,542. The journal entry to record this transaction will include a debit to which of the following accounts and for how much? (Check all that apply.)



Most bonds require __________ value to be repaid at maturity and __________ to be paid semiannually.

 

A bond is its issuer's written promise to pay an amount equaling the _____ value of the bond with interest.

 

When the market rate is 10%, a company issues $60,000 of 12%, 10-year bonds dated January 1, 2017, that mature on December 31, 2026, and pay interest semiannually. When the bonds mature, the issuer records its payment of principal with a __________ to Cash in the amount of __________.

 

The bond contract rate determines the annual interest paid by multiplying the bond ______ value by the contract rate.

 

The bond's _____ rate of interest is the rate that borrowers are willing to pay and lenders are willing to accept for a particular bond and its risk level.

 

The par value of a bond, also called the face amount or face value, is paid at a stated future date, known as the bond’s     date.

 

A company issues $100,000 of 6%, 10-year bonds dated January 1, that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the first semi-annual interest payment with which of the following entries?

 

Market rates help determine the selling price of bonds. Identify which scenarios should be matched together.

 

A company issues $75,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the payment of principal at maturity with a credit to __________ in the amount of __________.

 

A(n)     note is an obligation requiring a series of payments to the lenders.

 

2.
A bond discount increases ______ at each semi-annual interest payment.
 
 
3.
Bond market values are expressed as a percentage of their par (face) value. For example, a company's bonds might be trading at 1003, meaning that they can be bought or sold for _________ of their par value.
 
 
4.
The bond's __________ rate of interest is the rate that borrowers are willing to pay and lenders are willing to accept for a particular bond and its risk level.
 
 
5.
A company borrows $50,000 by signing a $50,000, 6%, 5-year note that requires equal payments of $11,870 at the end of the each year. The first payment will record interest expense of:
 
 
6.
A company borrows $60,000 by signing a $60,000, 8%, 6-year note that requires equal payments of $12,979 at the end of each year. The first payment will record interest expense of $4,800 and will reduce principal by $8,179. The journal entry to record this payment will include a debit to which of the following accounts and in what amount?
 
 
7.
A company borrows $60,000 from a bank to purchase equipment. It signs an 8% note requiring six annual payments of principal plus interest. This is an example of a (n) _________ note.
 
 
8.
A company borrows $70,000 by signing a $70,000, 8%, 6-year note that requires equal payments of $15,142 at the end of each year. The first payment will record interest expense of $5,600 and will reduce principal by:
 
 
9.
A company borrows $70,000 by signing a $70,000, 8%, 6-year note that requires equal payments of $15,142 at the end of each year. The first payment will record interest expense of $5,600 and will reduce principal by $9,542. The journal entry to record this transaction will include a debit to which of the following accounts and for how much?
 
 
10.
A company borrows $80,000 by signing an $80,000, 6%, 5-year note that requires equal payments of $18,992 at the end of each year. The first payment will record interest expense of $_____________________
 
 
11.
A company issued $500,000 of 9%, 10-year bonds dated January 1 and pay interest semiannually on June 30 and December 31 each year. The bonds are sold for $480,000, yielding a discount of $20,000. Using the straight- line amortization method, the company will amortize the discount by _____________ on each semiannual interest payment.
 
 
13.
A company issues $50,000 of 8%, 10 year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the first semiannual interest payment with a credit to ____________________ in the amount of $___________________
 
 
14.
A company issues $50,000 of 8%, 10- year bonds dated January 1 that pay interest semiannually on June 30 and December 31, each year. If bonds are sold at par value, the issuer records the payment of principal at maturity with a debit to _______________________ in the amount of _______________.
 
 
15.
A company issues $50,000 of 9%, 10-year bonds dated January 1, 2009, that mature on December 31, 2018, and pay interest semiannually of $2,250. On December 31, 2013, when the bond premium is $2,500, the bonds are called for $55,000. The journal entry to record this transaction would record a ____________ to Loss on Bond Retirement of $2,750.
 
 
19.
A company issues $80,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $84,000 for the bonds, the issuer will record the sales with a ______________ to ____________________ on bonds payable in the amount of $4,000.
 
 
20.
A company issues $100,000 of 5%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the first semiannual interest payment with a debit to which of the following accounts and in what amount?
 
 
 
 
 
 
 
 
 
 
 
 

24.
Holders of ___________________ bonds have the right to convert their bonds to stock. When conversion occurs, the bonds carrying value id transferred to equity accounts and no gain or loss is recognized.
 
 
26.
A liability expressed by a written promise to pay a definite sum of money on demand or on a specific future date is a (n):
 
 
27.
Most bonds require par value to be repaid ______ and interest to be paid ____________________.
 
 
28.
Most bonds require _____________________ value to be repaid at maturity and __________________ to be paid semiannually.
 
 
30.
A (n) ____________ on bonds payable occurs when a company issues bonds with a contract rate less than the market rate.
 
 
33.
The ________ rate is the interest rate specified in the indenture—sometimes referred to as the coupon rate, stated rate, or nominal rate.
 
 
34.
Star Bank provided cash to a customer, J. Brown, to pay for a building. Star required that Brown also sign a(n)        (mortgage/installment/bond) note payable, which allows the bank to be paid by the cash proceeds of the sale of the building if Brown fails to pay on the note.
 
 
36.
The _______ value of a bond, also called the face amount or face value, is paid at a specified future date, known as the bond's maturity date.
 
 
39.
When the market rate is higher than the bond contract rate on the date of the issuance, the bonds will be sold at a ________________
 
 
40.
Which of the following statements are disadvantages of bond financing?
 
 
41.
Which of the following statements is an advantage of bond financing?
 
 
 
 
 
 
 
 
 

14.
A company borrows $50,000, 8% note that requires six equal payments of _______ at the end of each year. The present value of the annuity of six annual payments, discounted at 8% equals 4. 6229.
 
 
15.
A company borrows $60,000 by signings a $60,000, 8%, 6 year note that requires equal payments of $12,979 at the end of each year. The first payment will record interest expense of $8,400 and will reduce principal by $8,179. The journal entry will include debits to:
 
 
16.
A company issues $50,000 of 5% 10 year bonds dated Jan 1 and pay interest semiannually. The bonds are sold for $48,800. Using the straight line amortization method, the company will amortize the discount by _____ on each semiannual interest payment.
 
 
17.
A company issues $60,000 of 5%, 10 year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $59,000 for the bonds, the issuer will record the sale with a (debit/credit) to discount on Bonds Payable in the amount of ______
 
 
24.
A company issues a $100,000 of 6%, 10 year bonds dated January 1 that pay interest semiannually. If the issuer accepts $98,000 for the bonds, the issuer will record the sale with a (debit/credit) to bonds payable in the amount of
 
 
25.
A company issues an $80,000 of 6%, 5 year bonds dated January 1, that pay interest semiannually. If the issuer accepts $84,000 for the bond, the issuer will record the sale with (debit/credit) to (discount/premium) on Bonds Payable in the amount of $4000)
 
 
35.
Most bonds require par value to be repaid_______ and interest to be paid _____
 
 
38.
The required semiannual interest payment for a premium bond using the effective amortization method What are the entries?
 
 
40.
Since bond market values are expressed as a percentage of their bond value, a $1000 bond being sold at 93 would be trading at...
 
 
42.
Star bank provided cash to a customer to pay for a building. Star required the customer to sign a (mortgage/installment/bond) note payable, which allows the bank to be paid by the cash proceeds of the sale of the building if they fails to pay the note.
 
 
45.
We enter into a 6 year lease for a copy machine. The lease transfers all of the risks and rewards to us (the present value of its $1298 lease payments is 6000). On the date we sign the lease, we record a transaction with a debit to what account and amount, in the amount of 0.
 
 
46.
What is true of amortizing premium bond using the effective interest amortization method:
 
 
47.
When a bond is sold at discount the _____ value will increase at each semiannual interest payment by the amortization of bond discount
 
 
48.
When contract rate is equal to market rate
 
 
49.
When contract rate is greater than market rate
 
 
 
 
 
 
 
 
 
 
 
 
 

50.
When contract rate is less than market rate
 
 
52.
When using the effective bond amortization method to get your semiannual interest expense,
 
 
53.
While the straight line method of amortizing bond premium or discounts keeps the amortization equal over the life of the bond, the effective interest method keeps the _________ equal over the life of the bond.
 
 
 

2.
 
 
A company borrows $80,000 by signing an $80,000, 6%, 5-year note that requires equal payments of $18,992 at the end of each year. The first payment will record interest expense of __________.
3.
 
 
A company borrows $60,000, by signing a 8%, 6-year note that requires equal payments of $12,979 at the end of each year. The first payment will record interest expense of $4,800 and will reduce interest principal by __________.
5.
 
 
Since bond market values are expressed as a percentage of their bond value, a $1,000 bond that is being sold at 93 would be trading at __________.
6.
 
 
When the market rate is 12%, a company issues $50,000 of 9%, 10-year bonds dated January 1, 2017, that mature on December 31, 2026, and pay interest semiannually. When the bonds mature, the issuer records its payment of principal with a debit to __________ in the amount of __________.

A. Bonds Payable; $50,000
B. Bonds Payable; $95,000
C. Cash; $50,000
D. Cash; $95,000
7.
 
 
 
The three __________ in regards to financing are:

1. Bonds do not affect owner control.
2. Interest on bonds is tax deductible.
3. Bonds can increase return on equity.
11.
 
 
Sometimes payments follow an __________, which is a series of equal payments at equal time intervals.
12.
 
 
A __________ is similar to a bond payable but is normally transacted with a single lender such as a bank.

A. note payable
B. account payable
C. note receivable
D. account receivable
14.
 
 
A company issues $500,000 of 9%, 10-year bonds dated January 1 and pay interest semiannually on June 30 and December 31 each year. The bonds are sold for $480,000, yielding a discount of $20,000. Using the straight-line amortization method, the company will amortize the discount by __________ on each semiannual interest payment.

A. $23,500
B. $1,000
C. $2,000
D. $48,000
17.
 
 
The __________ is the interest rate specified in the indenture—sometimes referred to as the coupon rate, stated rate, of nominal rate.

A. market rate
B. contract rate
C. par value
18.
 
 
Bonds payable to whoever holds them are called __________ or unregistered bonds. Sales or exchanges might not be recorded, so the holder of this type of bond is presumed to be its rightful owner. As a result, when lost, these bonds are difficult to replace.
 
 
 
 
 
 
 
 
 
 
 
 

20.
 
 
 
A __________ includes specifics such as the issuer's name, the par value, the contract interest rate, and the maturity date. Many companies reduce costs by not issuing paper versions to bondholders.
21.
 
 
The legal document identifying the rights and obligations of both the bondholders and the issuer is called the __________, which is the legal contract between the issuer and the bondholders (and specifies how often interest is paid).
22.
 
 
When bonds mature and are paid back, the issuer records its payment with a debit to __________.
23.
 
 
__________ refers to the fact that bonds are securities that can be readily bought and sold. A large volume of this type of activity occurs on both the New York Stock Exchange and the American Exchange.
24.
 
 
 
__________ (and notes) have an option exercisable by the issuer to retire them at a stated dollar amount before maturity.
25.
 
 
Long-term (non-cancelable) leases by which the lessor transfers substantially all the risks and rewards of ownership to the lessee
26.
 
 
A discount is deducted from the par value of bonds to yield the __________.
27.
 
 
 
A company issues $50,000 of 8%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the semi-annual interest payment with a credit to __________ in the amount of __________.
29.
 
 
A(n) __________ is an obligation requiring a series of payments to the lenders.

A. term note
B. registered note
C. installment note
D. secured note
30.
 
 
The bond issuer pays the interest rate specified in the indenture, the _________, also referred to as the coupon rate, stated rate, or nominal rate.
31.
 
 
 
__________ (and notes) can be exchanged for a fixed number of shares of the issuing corporation's common stock. Exchangeable debt offers holders the potential to participate in future increases in stock price.
32.
 
 
Many bearer bonds are also called __________. This term reflects interest coupons that are attached to the bonds. When each coupon matures, the holder presents it to a bank or broker for collection.
33.
 
 
 
A company issues $400,000 of 8%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with a __________ (debit/credit) to Bond Payable in the amount of __________.
34.
 
 
 
A company issues $80,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31. If the issuer accepts $84,000 for the bonds, the issuer will record the sale with a __________ (debit/credit) to __________ (Discount/Premium) on Bonds Payable in the amount of $4,000.
 
 
 
 
 
 
 

36.
 
 
 
A measure to assess the risk of a company's financing structure. __________ is equal to total liabilities divided by total liabilities.

X = total liabilities/total equity.
38.
 
 
One disadvantage of bond financing is that bonds can __________. This occurs when a company earns a lower return with the borrowed funds than it pays in interest. This downside risk of financial leverage is more likely to arise when a company has periods of low income or net losses.
39.
 
 
The two main __________ in regards to financing are: 

1. Bonds can decrease return on equity.
2. Bonds require payment of both periodic interest and the par value at maturity.
40.
 
 
When the market rate is less than the bond contract rate on the date of issuance, the bonds will be sold at a (discount/premium)       .
41.
 
 
A __________ occurs when a company issues bonds with a contract rate less than the market rate. This means that the issue price is less than par value. It is a contra liability account.
43.
 
 
The _________ method allocates total bond interest expense over the bonds' life in a way that yields a constant rate of interest.
44.
 
 
Both U.S. GAAP and IFRS allow companies to account for bonds and notes using fair value (different form the amortized value). This method is referred to as the __________.
45.
 
 
A third advantage of bond financing is that bonds can __________. A company that earns a higher return with borrowed funds than it pays in interest on those funds increases its return on equity. This process is called financial leverage or trading on the equity.
46.
 
 
An __________ is an obligation requiring a series of payments to the lender. They are common for franchises and other businesses when lenders and borrowers agree to spread payments over several periods.
47.
 
 
The straight-line bond amortization method allocates an equal portion of the total bond __________ to each interest period.
48.
 
 
A bond discount is actually added __________ (the difference between what a company borrows and the total repayment).
49.
 
 
 
Bonds with low credit ratings due to a higher than average likelihood of default. On the upside, the high risk can yield high returns if the issuer survives and and repays its debts. Investors identify and buy bonds with low credit ratings when they believe those bonds will survive and payoff their obligations.
 
 
 
 
 
 
 

50.
 
 
A(n)        is a contractual agreement between a lessor (asset owner) and a lessee (asset renter or tenant) that grants the lessee the right to use the asset for a period of time in return for cash (rent) payments.
52.
 
 
The rate that borrowers are willing to pay and lenders are willing to accept for a particular bond at its risk level is called the bond __________.
53.
 
 
A __________ is a legal agreement that helps protect a lender if the borrower fails to make required payments on notes or bonds. It gives the lender a right to be paid from the cash proceeds of the sale of a borrower's assets identified in the agreement.
54.
 
 
The acquisition of assets without reporting any related liabilities (or other asset outflows) on the balance sheet is called off-balance-sheet __________.
55.
 
 
Short-term (or cancelable) leases in which the lessor retains the risks and rewards of ownership.
56.
 
 
One advantage of bond financing is that bonds do not affect __________. Equity financing reflects ownership in a company, whereas bond financing does not.
58.
 
 
The __________, also called the face amount or face value, is paid at a specified future date known as the bond's maturity date.
59.
 
 
A __________ is a contractual agreement between an employer and its employees for the employer to provide benefits (payments) to employees after they retire.
60.
 
 
A second disadvantage of bond financing is that bonds require payment of both __________ and __________. Bond payments can be especially burdensome when income and cash are really low. Equity financing, in contrast, does not require any payments because cash withdrawals (dividends) are paid at the discretion of the owner (or board).
61.
 
 
When the current market rate is less than the bond contract rate on the date of issuance, the bond will be sold at a(n) __________.
62.
 
 
When the contract rate of bonds is higher than the market rate, the bonds will sell at a price higher than par value. The amount by which the bond price exceeds par value is the __________.
63.
 
 
Bonds issued in the names and addresses of their holders are __________. The issuer makes bond payments be sending checks (or cash transfers) to holders.- holder must notify the issuer of any ownership change. These bonds offer the issuer the practical advantage of not having to actually issue bond certificates.
64.
 
 
 
__________ (and notes) have specific assets of the issuer pledged (or mortgaged) as collateral. This arrangement gives holders added protection against the issuers default.
65.
 
 
__________ (and notes) mature at more than one date (often in series) and thus are usually repaid over a number of periods.
66.
 
 
Many bonds are __________, which to reduce the holder's risk require the issuer to create a sinking fund of assets set aside at specified amounts and dates to repay the bonds.
67.
 
 
 
The __________ method allocates an equal portion of the total bond interest expense to each interest period.
68.
 
 
A second advantage of bond financing is that interest on bonds is __________. This applies for the issuer who makes bond interest payments, not to the owners who receive equity payments (distributions).
69.
 
 
__________ (and notes) are scheduled for maturity on one specified date.
70.
 
 
_______ bonds (and notes), also called debentures, are backed by the issuer's general credit standing.
 
 
 
 
 
 
 

2.
The ability to generate positive market expectations is called:
 
 
3.
The ability to meet short-term obligations and to efficiently generate revenues is called:
 
 
4.
The ability to provide financial rewards sufficient to attract and retain financing is called:
 
 
5.
The accountant for Huckleberry Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:
Retained earnings-$151,000
Cash dividends-$46,000
net income-$92,000

What is the ending balance for retained earnings?
 
 
6.
Accounting for long-term investments in equity securities with controlling influence uses the:
 
 
7.
Accounting standards:
 
 
8.
Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Addam's statement of cash flows?
 
 
9.
Adonis Corporation issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issuance date was 7.5%. Adonis received $206,948 in cash proceeds. Which of the following statements is true?
 
 
10.
An advantage of bond is:
 
 
11.
All of the following are true for Available-for-sale equity securities except:
 
 
12.
All of the following state,ets regarding equity secutiries are true except:
 
 
13.
All of the following statements regarding accounting for trading securities under U.S. GAAP are true except:
 
 
14.
All of the following statements regarding accounting treatments for liabilities under U.S. GAAP and IFRS are true except:
 
 
15.
All of the following statements related to preparation of the statement of cash flows under U.S. GAAP and IFRS are true except:
 
 
16.
All of the following statements related to reporting cash flows from operating activities under U.S. GAAP and IFRS are true except:
 
 
17.
A(n) _______ is a legal agreement that helps to protect a lender if a borrower fails to make required payments on notes or bonds. This agreement gives the lender the right to be paid from the cash proceeds of the sale of the borrower's assets, as identified in the agreement.
 
 
18.
A A(n)       is the issuer's written promise to pay an amount equaling the par value. The par value is paid at a specified future date. Most often, the issuer is required to make semiannual interest payments.
 
 
19.
A(n) ____ note is an obligation requiring a series of payments to the lenders.
 
 
20.
The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:
 
 
21.
The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:
 
 
22.
At acquisition, debt securities are:
 
 
23.
At December 31, Suri Co. owns securities that are due in 36 months. Sure has owned the securities for three years, and has always planned to hold them until maturity. The securities would be reported as ___ on the balance sheet.
 
 
24.
At the beginning of the year, Ryan Co. purchased $25,000 of trading securities. At the end of the year, Ryan determined that fair value of the securities is $30,000. The entry that Ryan will make to reflect this change will include a debit to ___ and a credit to ___ in the amount of $5,000.
 
 
25.
At the end of the accounting period, the owners of debt securities.
 
 
26.
Available-for-sale securities are reported at fair value. Unrealized losses should be reported on the ___ section of the balance sheet.
 
 
27.
Avery, Inc. uses the equity method to report its 60% investment in Mack Co. In this situation, Avery would be the parent company and Mack would be called the
 
 
28.
Baird Co. owns 1,000 shares of Dever Inc.'s common stock and classifies them as available-for-sale securities. On September 26, Baird received $1,200 of cash dividends from Denver. The journal entry to record this transaction would include a ___ to Dividend Revenue.
 
 
29.
Barnes Company purchased $50,000 of 8% bonds at par. The bonds mature in six years and are held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?
 
 
 
 
 
 
 
 
 
 
 

35.
A bond discount increases ____ at each semi-annual interest payment.
 
 
36.
A bond discount is actually added interest ___ (the difference between what a company borrows and the total repayment).
 
 
37.
A bondholder that owns a $1,000, 10%, 10-year bond has:
 
 
38.
A bond is issued at par value when:
 
 
40.
A bond ___ may be issued as evidence of the company's debt. This document includes specifics such as the issuer's name, the par value, the contract interest rate, and the maturity date. Many companies reduce cost by not issuing these paper documents to bondholders.
 
 
41.
___ bonds (and notes) are scheduled for maturity on one specified date.
 
 
42.
___ bonds (and notes) can be exchanged for a fixed number of shares of the issuing corporation's common stock.
 
 
43.
___ bonds (and notes) have an option exercisable by the issuer to return them at a stated dollar amount before maturity.
 
 
44.
Bonds are securities that can be readily bought and sold. A bond issue consists of a number of bonds, usually in denominations of ___ or ___ and is sold to many different lenders.
 
 
45.
A bond sells at a discount when the:
 
 
46.
Bonds issued in the names and addresses of their holders are ___ bonds.
 
 
49.
Bonds that give the issuer an option of retiring them before they mature are:
 
 
50.
Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as:
 
 
51.
Bonds that have interest coupons attached to their certificates, which the bondholders present to a bank or broker for collection, are called:
 
 
52.
Bonds that mature at more than one date with the result that the principal amount is repaid over a number of periods are known as:
 
 
53.
The building blocks of financial statement analysis do not include:
 
 
54.
The carrying value of a long-term note payable is computed as:
 
 
55.
The carrying value of bonds at maturity always equals:
 
 
56.
The cash flow on total assets ratio:
 
 
 
 
 
 
 
 
 

57.
Chang industries has bonds outstanding with a par value of $200,000 and a carrying value of $203,000. If the company calls these bonds at a price of $201,000, the gain or loss on retirement is:
 
 
58.
Clabber Company has bonds outstanding with a par value of $100,000 and a carrying value of $97,300. If the company calls these bonds at a price of $95,000, the gain or loss on retirement is:
 
 
59.
Common uses of the statement of cash flows include all but which of the following?
 
 
61.
A company borrows $50,000 by signing a $50,000, 8% note that requires six equal payments of ___ (round to the nearest dollar) at the end of each year. (The present value of an annuity of six annual payments, discounted at 8% equals 4.6229.)
 
 
66.
A company borrows $80,000 by signing a $80,000, 6%, 5-year note that requires equal payments of $18,992 at the end of each year. The first payment will record interest expense of $___.
 
 
67.
A company issued $50,000 of 8%, 10-year bonds on January 1. The bonds pay semi annual interest. The present value factor of a single amount of 20 periods at 8% is 0.2145. The present value of 10 periods at 4% is 0.6756. The present value of 20 periods at $4 is 0.4564. Determine the present value of the par value of the bonds.
 
 
68.
A company issued 8%, 15-year bonds with a par value of $550,000 that pay interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is:
 
 
 
 
 
 
 
 
 

70.
A company issues $50,000 of 8%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31, each year. If bonds are sold at par value, the issuer records the payment to principal at maturity with a debit to ___ in the amount of ___.
 
 
71.
A company issues $50,000 of 9%, 10-year bonds dated January 1, 2017, that mature on December 31, 2026, and pay interest semiannually of $2,250. On December 31, 2021, when the bond premium is $2,500, the bonds are called for $55,000. The journal entry to record this transaction would record a ___ to Loss on Bond Retirement of $2,750.
 
 
73.
A company issues $90,000 of 5%, 5-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $95,000 for the bonds, the $5,000 premium on bonds payable will ___ total interest expense recognized over the life of the bond.
 
 
74.
A company issues $90,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $85,000 for the bonds, the issuer will record the sale with a _____ to Discount on Bonds Payable in the amount of $___.
 
 
75.
A company issues $90,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $85,000 for the bonds, the issuer will record the sale with a ___ to Discount on Bonds Payable in the amount of $____.
 
 
76.
A company issues $90,000 of 9%, 10-year bonds dated January 1 that pay interest semiannually on June and December 31 each year. If bonds are sold at par value, the issuer records the payment of principal at maturity with a _____ to bonds payable in the amount of _____.
 
 
77.
A company issues $100,000 of 5%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If the bonds are sold at par value, the issuer records the sale with a debit to _____ in the amount of $____.
 
 
78.
A company issues $100,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on each June 30 and December 31. If the issuer accepts $98,000 for the bonds, the issuer will record the sale with a ___ to Bonds Payable in the amount of $_____.
 
 
80.
a company issues $100,000 of 10%, 5-year bonds dated January 1 that pay interest semiannually. The bonds are issued when the market rate is 8%. The present value tables indicate that the present value factor for 3% at 5 periods is 0.8626; for 3% at 10 periods is 0.7441; for 4% at 5 periods is 0.8219 and for 4% at 10 periods is 0.6756. The present value of the par value of the bond is:
 
 
83.
A company issues 8% bond with a par value of $40,000 at par on January 1. The market rate on the date of issuance was 7%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bod holder(s) is:
 
 
85.
A company issues 9%, 5-year bonds with a par value of $100,000 on January 1 at a price of $106,160, when the market rate of interest was 8%. The bond pay interest semiannually. The amount of each semiannual interest payment is:
 
 
86.
A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value as a long-term investment. The company intends to hold the bonds to maturity. The correct entry to record the purchase of the bond investment is:
 
 
87.
A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a:
 
 
88.
A company sells a trading security costing $1,000 for $800 cash. The journal entry to record this transaction will include a ___ to loss on sale of short-term investments of $___.
 
 
89.
The comparison of a company's financial condition and performance across time is known as:
 
 
90.
The contract between the bond issuer and the bondholders identifying the rights and obligations of the parties, is called a(n):
 
 
91.
A contract pledging title to assets as security for a note or bond is known as a(an):
 
 
92.
A controlling influence over the invest is based on the investor owning voting stock exceeding:
 
 
93.
A decrease in the fair value of a security that has not yet been realized through an actual sale of the security is called a(n):
 
 
94.
The direct method of reporting operating cash flows:
 
 
95.
A disadvantage of bond financing is:
 
 
 
 
 
 
 
 
 
 
 
 
 

98.
A Discount on Bonds Payable account is:
 
 
99.
Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is the:
 
 
100.
Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:
 
 
101.
The equity method with consolidation states that the controlling investor is called the parent and the invested is called the:
 
 
102.
Equity securities with significant influence
 
 
103.
An equity security is sold for $35,000 cash. The cost of the security was $30,000. The journal entry to record this sale will include which of the following credit entries? (Check all that apply)
 
 
104.
An equity security is sold for $79,000 cash. The cost of the security was $70,000. The entry to record this sale will include a ___ to gain on sale of security for $___.
 
 
105.
An example of a transaction that must be disclosed as a non cash investing and financing activity includes all but which of the following?
 
 
106.
Fierce, Co. holds $50,000 in long-term debt securities. On December 31, interest earned during the period on the securities equals $1,500. The adjusting entry to accrue interest will include a debt to interest ___ and a credit to interest ___.
 
 
107.
Financial reporting refers to:
 
 
108.
Financial statement analysis involves all of the following except:
 
 
109.
___ financial statements show the financial position, results of operations, and cash flows of all entities under the parent's control, including all subsidiaries.
 
 
110.
Financial statements with date for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in both dollar amounts and percentages, are referred to as:
 
 
111.
Finanicial statements that show the financial position, results of operations, and cash flows of all entities under the parent company's control, including all subsidiaries are known as:
 
 
112.
Flora Co. holds $76,000 of available-for-sale securities. At the end of the year, Flora determined that the fair value of these securities is $80,000. The journal entry tat Flora will make to reflect this change in value will include the following entries in the amount of $4,000.
 
 
113.
Forever, Inc. announces an offer to issue bonds with a $100,000 par value, an 8% annual contract rate (paid semiannually) and a two-year life. The market rate is 10%, so the bond will be sold at:
 
 
114.
Grace, Inc. uses the equity method to report a large investment in Jorge, Inc. In this situation, Grace is called the ___, and Jorge is called the subsidiary.
 
 
115.
A group of trending securities is reported together as a portfolio at:
 
 
116.
harris Co. holds a large portion of stock in Lang, Inc. Lang reported net income of $30,000 during the period. Harris will report its 30% of the earnings with a credit to ___ in the amount of ___.
 
 
117.
Held to maturity (debt) securities
 
 
118.
Held-to-maturity (debt) securities 
Trading (debt and equity) securities 
Equity securities with significant influence
 
 
 
 
 
 
 
 
 

119.
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at price of $3,456,448.

1. Prepare the January 1, 2017, journal entry to record the bond's issuance.
 
 
120.
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at price of $3,456,448.
2(a) For each semiannual period, complete the table below to calculate the cash payment
2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 
2(c) For each semiannual period, complete the table below to calculate the bond interest expense.

2A to 2C
 
 
121.
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at price of $3,456,448.
3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
 
 
122.
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at price of $3,456,448.
4.Prepare the first two years of an amortization table using the straight-line method.
 
 
 
 
 
 
 
 
 

123.
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at price of $3,456,448.
5. Prepare the journal entries to record the first two interest payments.
 
 
124.
Holders of ___ bonds have the right to convert their bonds to stock. When conversion occurs, the bonds' carrying value is transferred to equity accounts and no gain or loss is recognized.
 
 
125.
Horizontal analysis:
 
 
126.
How long a company holds inventory before selling it can be measured by dividing cost of goods sold by the average inventory balance to determine the:
 
 
127.
Identify the three factors that help determine how to account for investments in securities.
 
 
128.
If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):
 
 
129.
Income from influential investments is reported in the earnings from long-term investment account. This account is a temporary account, closed to the ___ ___.
 
 
130.
___ income is defined as all changes in equity during the period except those from owners' investments and dividends.
 
 
131.
The indirect method for the preparation of the operating activities section of the statement of cash flows:
 
 
132.
In preparing a company's statement of cash flows for the most recent year, Ransom Corp. reported the following information:
Repayment of out-$107,000
Purchase of Treasury-$62,000
Issuance CS- $46,000
Payment of cash div- $15,000

Net cash flows from financing activities for the year were:
 
 
133.
In preparing Marjorie Company's statement of cash flows for the most recent year, the following information is available:
Purchase of equip-$260,000
Proceeds from sale-$87,000
Purchase of land-$91,000

Net cash flows from investing activities for the year were:
 
 
134.
Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:
 
 
135.
___ investments ins securities are defined as those securities that are not readily convertible to cash or are not intended t be converted to cash in the short term.
 
 
136.
A ___ ___ is similar to a bond payable but is normally transacted with a single lender such as a bank.
 
 
137.
Ivers Co. holds $30,000 of availabe-for-sale securities. Ivers intends to hold these securities for three years. Ivers should report these securities as a(n) ___ on the balance sheet.
 
 
138.
Johnson Co. holds noninfluential investments. Johnson should report these investments on the balance sheet at ___ value.
 
 
 
 
 
 
 
 
 

139.
Johnson, Inc. holds equity securities in Flaver Co. with a significant influence. This means that Johnson, Inc. must hold ___% of Flavor Co. stock.
 
 
140.
J.P. Industries purchased 2,000 shares of Yang's common stock for $143,000 as long-term investment. The investment is classified as available-for-sale securities. The par value of the stock was $1 per share. J.P. paid $375 in commissions on the transaction. J.P.'s entry to record the purchase transaction would include a:
 
 
141.
Kendall Corp. purchased at par value $160,000 of Barker COmpany's 7% bonds that mature in 10 months. The bonds pay interest semiannually on June 1 and December 1. Kendall plans to hold the bods until they mature. The journal entry to record Kendall's purchase of the bond is:
 
 
142.
Landmark Corp. buys $300,000 of Schroeter Company's 8%, 5-year bonds at par value on September 1. Interest payments are made semiannually. All of the following regarding accounting for the securities are true except:
 
 
143.
The legal document identifying the rights and obligations of both the bondholders and the issuer is called the bond ___. This document describes the number of bonds authorized, their par value, and the contract interest rate.
 
 
144.
Long Co. holds $60,000 of available-for-sale securities. The securities mature in three months. Long should report these securities as a(n) ___ on the balance sheet.
 
 
145.
A long-term investment classified as equity securities with controlling influence implies that the investor can exert a controlling influence over the invest. An investor wh owns more than ___ % of a company's voting stock has control over the investee.
 
 
146.
Long-term investments:
 
 
147.
Long-term investments are reported in the:
 
 
148.
Long-term investments include:
 
 
149.
Long-term investments in held-to-maturity debt securities are accounted for using the:
 
 
152.
A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
 
 
153.
A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:
 
 
154.
Many bonds are ___ fund bonds, which reduces the holder's risk by requiring the issuer to set aside assets at specified amounts and dates to repay the bonds.
 
 
 
 
 
 
 
 
 

155.
The market value (price) of a bond is equal to:
 
 
156.
Marshland Company is preparing the company's statement of cash flow for the fiscal year just ended. The following information is available:
Cash div dec-$40,000
Cash div pay begin- $17,000
Cash div pay end - $13,000

Cash paid for dividends was:
 
 
157.
McBeigh Corp. owns 40% of Gondor Company's common stock. McVeigh received $41,200 in cash dividends from Gondor. The entry to record this transaction should include a:
 
 
158.
The ___ method with consolidation is used to account for long-term investments in equity with controlling influence. The investor reports consolidated financial statements when owning such securities.
 
 
159.
Montclair Company is considered a project that will require a $500,000 loan. It presently has total liabilities of $220,000 and total assets of $620,000. 

1. Compute Montclair's (a) present debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $500,000 to fund the project.
 
 
161.
Net income divided by net sales is the:
 
 
162.
Net sales divided by Average accounts receivable, net is the:
 
 
163.
Noncash investing and financing activities may be disclosed in:
 
 
164.
An ___ note is an obligation requiring a series of payments to the lenders.
 
 
165.
Of the following, which one affects cash during a period?
 
 
166.
One of several ratios that reflects solvency includes the:
 
 
167.
On February 15, Jewel Company buys 7,000 shares of Marcelo Corp. common at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Marcelo Corp. declares dividend of $1.15 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The fair value of the remaining 3,500 shares is $29.50 per share. The amount that Jewel Company should report in the asset section of its year-end December 31 balance sheet for its investment in Marcelo Corp. is:
 
 
 
 
 
 
 
 
 

168.
On February 15, Jewel Company buys 7,000 shares of Marcelo Corp. common at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On March 15, Marcelo Corp. declares a dividend of $1.15 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The balance in the investment account on April 16 is:
 
 
169.
On February 15, Jewel Company buys 7,000 shares of Marcelo Corp. common at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On March 15, Marcelo Corp. declares a dividend of $1.15 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The journal entry to record the dividend on April 15 is:
 
 
170.
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97 3/4. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104 1/2. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 

How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2017, through December 31, 2022?
 
 
171.
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97 3/4. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104 1/2. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 

How much did the company pay on January 1, 2023, to purchase the bonds that it retired?
 
 
172.
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97 3/4. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104 1/2. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 

How much does the company receive when it issues the bonds on January 1, 2017.
 
 
173.
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97 3/4. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104 1/2. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 

Prepare the journal entry to record the bond retirement at January 1, 2023.
 
 
 
 
 
 
 
 
 

174.
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97 3/4. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104 1/2. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 

What is the amount of the discount on the bonds at January 1, 2017?
 
 
175.
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97 3/4. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104 1/2. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 

What is the amount of the recorded gain or loss from retiring the bonds?
 
 
176.
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97 3/4. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104 1/2. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 

What is the carrying (book) value of the bonds and the carrying value of the 20% soon-to-be-retired bonds as of the close of business on December 31, 2022.
 
 
177.
On January 1, Parson Freight Company issues 7%, 10-year bonds with a par value of $2,000,000. The bonds pay interest semiannually. The market rate of interest is 8% and the bond selling price was $1,864,097. The bond issuance should be recorded as:
 
 
178.
On July 1, Shady Creek Resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What amount of interest expense will be included in the first annual payment?
 
 
 
 
 
 
 
 
 

179.
On July 1, Shady Creek Resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What is the journal entry to record the first annual payment?
 
 
180.
On November 1, 2017, Norwood borrows $200,000 cash from a bank by signing a five-year installment note bearing 8% interest. The note requires equal payments of $50,091 each year on October 31. 
1. Complete n amortization table for this installment note.
 
 
181.
On November 1, 2017, Norwood borrows $200,000 cash from a bank by signing a five-year installment note bearing 8% interest. The note requires equal payments of $50,091 each year on October 31. 
1. Prepare the journal entries in which Norwood records the following:
(a) Accrued interest as of December 31, 2017 (the end of its annual reporting period).
(b) The first annual payment on the note.
 
 
182.
Other comprehensive income includes which of the following? (Check all that apply)
 
 
183.
Par
 
 
185.
Phoenix Co. paid $24,500 plus a $500 brokerage fee to buy a 5%, 2-year bond payable with a $25,000 par value. The bonds pay interest semiannually. Phoenix intends to hold the bods until they mature. The entry to reflect this purchase would include a debit to which of the following accounts in what amount?
 
 
 
 
 
 
 
 
 

186.
Pravis Corporation owns 30% of Kuster Corporation. Pravis Corporation received $9,000 in cash dividends from Kuster Corporation. The entry to record receipt of those dividends is:
 
 
188.
The Premium on Bonds Payable account is a(n):
 
 
189.
Promissory notes that require the issuer to make a series of payments consisting of both interest and principal are:
 
 
190.
Quick assets divided by current liabilities is the:
 
 
191.
The ___ rate is the interest rate specified in the indenture- sometimes referred to as the coupon rate, stated rate, or nominal rate.
 
 
192.
Rex Co. holds a large portion of stick in Jones, Inc. Jones reported net income of $60,000 during the period. Rex will report its 30% of the earrings with a ___ to Earnings from Long-Term Investment in the amount of $___.
 
 
193.
Ryder Co. holds investments in securities that management intends to covert to cash within three months and that are readily convertible to cash. Ryder should report these securities as ___ on the balance sheet.
 
 
195.
___ securities are debt and equity securities not classified as trading to held-to-maturity securities. They re purchased to yield interest, dividends, or increases in fair value, but are not actively managed.
 
 
196.
___ securities are debt and equity securities that the company intends to actively manage and trade for profit. They are always classified as current assets.
 
 
197.
___ securities are debt securities a company intends and is able to hold until maturity. They re reported in current assets or long-term assets, depending on their maturity date.
 
 
198.
___ securities reflect a creditor relationship, such as investments in notes, bonds, or certificates of deposit. ___ securities reflect an owner relationship, such as shares of stock.
 
 
199.
Sharmer Company issues 5%, 5-year bonds with a par value of $1,000,000 and semiannual interest payments. On the issue date, the annual market rate for those bonds is 6%. What is the bond's issue (selling) price, assuming the following factors:

n= i= Present Value of an Annuity Present value of $1
5 5% 4.3295 0.7835
10 3% 8.7521 0.7812
5 6% 4.2124 0.7473
10 3% 8.5302 0.7441
 
 
200.
Short-term investments:
 
 
201.
Since bond market values are expressed as a percentage of their bond value, a $1,000 bond that is being sold at 93 would be trading at $ ___.
 
 
203.
The statement of cash flows cannot help address questions such as:
 
 
204.
The straight-line bond amortization method allocates an equal portion of the total bond _____ to each interest period.
 
 
 
 
 
 
 
 
 

205.
Strickland Corporation has invested in 10% of the outstanding stock of New Corporation. Strickland intends to actively manage this investment for profit. This investment is classified as:
 
 
207.
The the current market is less than the bond contract rate on the date of issuance, the bond will be sold at a(n) _____.
 
 
208.
Trading (debt and equity) securities
 
 
209.
Trading 
held-to-maturity
significant influence 
controlling influence
 
 
210.
Trading securities are debt and equity securities that the company intends to actively manage and trade for profit. They are always classified as:
 
 
211.
True or False: when a trading security is sold and the net proceeds are greater than the cost of the security, no gain or loss is recognized.
 
 
212.
The two business entities involved in an investment in securities with controlling influence, for which consolidated financial statements are prepared, are known as:
 
 
213.
Typical cash flows from investing activities include each of the following except:
 
 
214.
Use the following information to calculate cash received from dividends:
Dividends rev-$29,800
Dividends rec 01.01-$2,600
Dividends rec 12.31-$3,400
 
 
215.
Vera Co. holds a long-term investment with significant influence in Janey's Inc. Janey's paid Vera a $3,000 cash dividend. Vera would record the dividend with a debit to Cash and a credit to:
 
 
216.
Wendall Co. purchases 500 shares of Orison Inc. common stock at par value for $15,000. Wendall records the purchase of available-for-sale securities with a ___ to Long-Term Investments.
 
 
217.
When a bond is sold at a discount, the ___ value will increase at each semi-annual interest payment by the amortization of bond discount.
 
 
218.
When a bond is sold at a premium, the carrying value will ___ each period that the premium is amortized.
 
 
219.
When a bond sells at a premium:
 
 
220.
When a long-term investment with significant influence is sold, a gain or loss is computed by taking net proceeds less:
 
 
221.
When available-for-sale securities are sold, a gain or loss is recognized for the difference between net proceeds and the:
 
 
222.
When making a fair-value adjustment for trading securities, the Unrealized Gain or Loss is a ___ account and the Fair Value Adjustments- trading is a ___ account.
 
 
 
 
 
 
 
 
 

223.
When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except:
 
 
225.
When the market rate is 12%, a company issues $50,000 of 9%, 10-year bonds dated January 1, 2017, that mature on December 31, 2026, and pay interest semiannually. When the bonds mature, the issuer records its payment of principal with a debit to ________ in the amount of __________.
 
 
226.
When the market rate is less than the bond contact on the date of issuance, the bonds will be sold at a ___.
 
 
227.
When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?
 
 
228.
Which of the following accurately describes a debenture?
 
 
229.
Which of the following is included in the cash flows from financing activities section of the statement of cash flows?
 
 
230.
Which of the following is not a factor that helps determine how an account for investments in securities?
 
 
232.
Which of the following is not a reason that companies make investments?
 
 
234.
Which of the following statements is an advantage of bond financing?
 
 
235.
Which of the following statements is true?
 
 
236.
Which of the following statements support reasons that companies make investments? Select all that apply.
 
 
237.
With a held-to-maturity security matures, the journal entry to record the maturity will include a ___ to Long-Term Investments- Held to Maturity.
 
 
238.
Wyatt Co. plans to purchase 2,500 shares of Outer Wear Co. Wyatt would record this transaction with a ___ to the Long-Term Investments account.
 
 
 
 
 
 
 
 
 

On September 1st, a company sells $100,000 of 5-year, 6% bonds that pay interest semiannually on February 28 and August 31, for cash in the amount of $102,000. On December 31, the company will record an adjustment with:

 

Assume that a company plans to borrow cash and repay $10,000 in 3 years. How much does the company receive today if the interest rate on this loan is 10%? The present value of 10% for 1 period is 0.9091; for 2 periods is 0.8264; for 3 periods is 0.7513.

 

The Debt-to-Equity ratio helps assess the risk of a company’s financing structure by dividing total liabilities by total equity.