21) Hefley Corporation issued a 10%, $500,000, 8-year bond at 105. The entry to record the issuance transaction is to:

A) debit Cash $500,000; credit Bonds Payable $500,000.

B) debit Cash $525,000; credit Bonds Payable $525,000.

C) debit Cash $525,000; credit Bonds Payable $500,000; credit Premium on Bonds Payable $25,000.

D) debit Cash $500,000; debit Premium on Bonds Payable $25,000; credit Bonds Payable $525,000.

22) Miranda Corporation issued $200,000 of 12%, 10-year bonds for $220,000. The entry to record the issuance of the bonds includes a:

A) debit to Bonds Payable for $200,000.

B) credit to Premium on Bonds Payable for $20,000.

C) credit to Bonds Payable for $220,000.

D) credit to Cash for $220,000.

23) Plaza Corporation issued $350,000 of 8%, 10-year bonds for 98. The entry to record the issuance of the bonds includes a:

A) debit to Discount on Bonds Payable for $7,000.

B) credit to Bonds Payable for $343,000.

C) debit to Bonds Payable for $350,000.

D) credit to Cash for $343,000.

24) On October 1, Allan Company issued 8%, 10-year, $300,000 bonds at 105. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

A) $0.

B) $24,000.

C) $12,000.

D) $6,000.

25) On April 1, Braintree Corporation issued 10%, 10-year, $300,000 bonds at 106. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

A) $0.

B) $15,000.

C) $30,000.

D) $31,000.

26) Manning Corporation sells $200,000, 12%, 10-year bonds for 96 on January 1. Interest is paid on January 1 and July 1. Straight-line amortization is used. The entry to record the issuance of the bonds on January 1 is:

A)

Cash

200,000

Bonds Payable

200,000

B)

Cash

200,000

Discount on Bonds Payable

8,000

          Bonds Payable

192,000

C)

Cash

192,000

Bonds Payable

192,000

D)

Cash

192,000

Discount on Bonds Pay.

    8,000

Bonds Payable

200,000

27) A discount amortization does not affect the amount of cash paid for bond interest

28) When the amount received for the bond is less than the face value, the difference is written off over time in an account called Discount on Bonds Payable.

29) A bond issue of $500,000 sold at 107 has a bond premium of $35,000.

30) The interest method for amortization of bonds allocates equal amounts of premium to Bonds Interest Expense each period.



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