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Banister Company wishes to issue $600,000 of 10-year, 7% bonds, with interest paid annually at the end of the year. The market rate of interest is currently 5%. What information is needed in order to determine the issue price of the bond?


A) The market rate of interest, the stated rate of interest, the bond rating, and the bond life.
B) The face value of the bonds, the stated rate of interest, the market rate of interest, and the bond life.
C) The life of the bonds, the market rate of interest, the bond rating, and the face value of the bonds.
D) The face value of the bonds, the market rate of interest, the purpose of the issue, and the bond life.

E) B) and D)
F) B) and C)

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Time Value of Money Tables Use the information provided in the time value of money tables in the text to answer the question(s) that follow. - Refer to the Time Value of Money Tables. Homestead Company issued $1,000,000, 7-year, 8%, bonds with interest payable semiannually. The market rate was 6%. The issuance price of the bonds is:


A) $1,111,560.
B) $1,000,000.
C) $1,151,480.
D) $1,112,944.

E) None of the above
F) B) and D)

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Bonds with a face amount $1,000,000, are sold at 98. The entry to record the issuance is:


A)  Cash 1,000,000 Premium on Bonds Payable 20,000 Bonds Payable 1,020,000\begin{array}{lrr}\text { Cash } & 1,000,000 & \\\text { Premium on Bonds Payable } & 20,000 & \\\quad \text { Bonds Payable } & & 1,020,000\end{array}

B)  Cash 980,000 Premium on Bonds Payable 20,000 Bonds Payable        1,000,000\begin{array}{ll}\text { Cash } & 980,000 \\\text { Premium on Bonds Payable }&20,000 \\\text { Bonds Payable }&~~~~~~~1,000,000\\\end{array}

C) Cash980,000Discount on Bonds Payable20,000Bonds Pavable1,000,000\begin{array}{lr} Cash & 980,000 \\Discount~ on~ Bonds ~Payable & 20,000\\Bonds~ Pavable&1,000,000\end{array}

D)
Cash980,000  Bonds Payable         980,000\begin{array}{l}Cash&980,000\\~~Bonds ~Payable&~~~~~~~~~980,000\end{array}

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

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On January 1, 2012, Lead Inc. issues $10,000,000, five-year, 9 percent bonds at 98. The discount at the time of sales is $200,000. Interest is paid semiannually on June 30, and December 31. Required: A) Frovide the jounal entry to record the issuance of the bonds on January 1,2012 1,2012 . B) Provide the jounal entry to recogrize the interest expense on June 30 and December 31, 2012-2016 using straight-line amoutization C) Give the journal entry to record the repayment of the loan principal on December 31,2016.

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Paris Company issued bonds in the amount of $500,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what would be the total amount of interest paid over the life of the bonds?


A) $500,000
B) $200,000
C) $400,000
D) $ 40,000

E) A) and D)
F) A) and B)

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Britt Company Selected data from Britt Company's financial statements are provided below: Britt Company Selected data from Britt Company's financial statements are provided below: -If a company's current ratio is 3.0 and the current liabilities are $100,000, then the current assets are: A) $400,000. B) $300,000. C) $103,000. D) $ 33,333. -If a company's current ratio is 3.0 and the current liabilities are $100,000, then the current assets are:


A) $400,000.
B) $300,000.
C) $103,000.
D) $ 33,333.

E) A) and C)
F) None of the above

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____________________ bonds may be retired by the issuing company before their specified due date.

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The Collins Company sold $200,000 of 10-year bonds for $190,000. The stated rate on the bonds was 8% and interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid? (Numbers are omitted.)


A) IInterest Expense
Cash

B) Interest Expense
Discount on Bonds Payable
Cash

C) Interest Expense
Discount on Bonds Payable
Cash

D) Interest Expense
Bonds Payable
Cash

E) A) and B)
F) B) and D)

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The amount of money the borrower agrees to repay at maturity of a bond is usually referred to as the ____________________.

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State Corporation Below is a note on Disclosure of Leases for the State Corporation. The State Corporation leases office, warehouse and showroom space, retail stores and office equipment under operating leases, which expire no later than 2027. The Corporation normalizes fixed escalations in rental expense under its operating leases. Minimum annual rentals under non-cancelable operating leases, excluding operating cost escalations and contingent rental amounts based upon retail sales, are payable as follows: Fiscal year ending March 31, 2013$10,051,000201411,121,000201510,161,00020169,063,00020178,814,000Thereafter46,681,000\begin{array} { ll } 2013&\$ 10,051,000 \\2014&11,121,000 \\2015&10,161,000 \\2016&9,063,000 \\2017&8,814,000 \\Thereafter&46,681,000\end{array} Rent expense was $12,551,000; $8,911,000; and $5,768,000 for the years ended March 31, 2012, 2011, and 2010, respectively. - Refer to the information provided for State Corporation. What are the two types of leases that a company can have? Describe each briefly.

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The two types of leases that a company c...

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Tyson Construction Inc. Use the information provided for Tyson Construction Inc. to answer the following question(s) using the effective interest method. On January 2, 2012, Tyson Construction Inc. issued $1,000,000, 10-year bonds for $1,135,915. The bonds pay interest on June 30 and December 31. The stated rate is 10% and the market rate is 8%. - Refer to the information provided for Tyson Construction Inc. Determine the cash interest to be paid on June 30, 2012.


A) $50,000
B) $40,000
C) $42,400
D) $46,000

E) A) and B)
F) None of the above

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The Discount on Bonds Payable account is shown on the balance sheet as:


A) an asset.
B) an expense.
C) a contra-liability.
D) as a reduction in equity for the discount provided.

E) A) and B)
F) A) and D)

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When determining the amount of interest to be paid on a bond, which of the following information is necessary?


A) The market value of the bonds after one year.
B) The selling price of the bonds.
C) The stated rate of interest on the bonds.
D) The effective rate of interest on the bonds.

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

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Discount on Bonds Payable is shown on the balance sheet as a(n) ____________________.

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On the issuance date, the Bonds Payable account had a balance of $80,000,000 and Premium on Bonds Payable had a balance of $5,000,000. What was the issue price of the bonds?


A) $80,000,000
B) $79,000,000
C) $85,000,000
D) $75,000,000

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

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Jensen Company Jensen Company has the following information for the pay period of December 15 - 31, 2012: Salaries $10,000fedrial income tax $1,500state income $1,200 FICA$565\begin{array} { l } \text {Salaries }&\$10,000& \text {fedrial income tax }&\$1,500\\ \text {state income }&\$1,200& \text { FICA}&\$565\\\end{array} - Refer to the information provided for Jensen Company. Salaries are paid on December 31, 2012. On December 31st, Cash would be recorded for:


A) $8,500.
B) $10,000.
C) $6,735.
D) $7,300.

E) A) and B)
F) A) and D)

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Tyson Construction Inc. Use the information provided for Tyson Construction Inc. to answer the following question(s) using the effective interest method. On January 2, 2012, Tyson Construction Inc. issued $1,000,000, 10-year bonds for $1,135,915. The bonds pay interest on June 30 and December 31. The stated rate is 10% and the market rate is 8%. - Refer to the information provided for Tyson Construction Inc. The interest expense on the bonds at June 30, 2012 is:


A) $50,000.00.
B) $45,436.60.
C) $57,135.75.
D) $90,873.20.

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

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Flounder Inc. Use the information provided for Flounder Inc. to answer the question(s) using the effective interest method. On January 1, 2012, Flounder Inc. issued $800,000, 10-year, 9% bonds for $662,356. The bonds pay interest on June 30 and December 31. The market rate is 12%. - Refer to the information provided for Flounder Inc. What is the carrying value of the bonds at the end of the ten years before the final maturity payment is made?


A) $800,000
B) $662,356
C) $137,643
D) $0

E) A) and D)
F) A) and B)

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With the effective interest method of amortization, the amortization of a bond discount results in a(n) :


A) increase in stockholders' equity.
B) decrease in liabilities.
C) increase in interest expense.
D) decrease in interest expense.

E) B) and D)
F) B) and C)

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The Premium on Bonds Payable account is shown on the balance sheet as:


A) a contra asset.
B) a reduction of an expense.
C) as an increase in equity for the premium provided.
D) an addition to a long-term liability.

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

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