41) The interest paid to bondholders is determined by:

A) multiplying the bond’s annual rate of interest by the face value.

B) multiplying the market rate of interest by the face value.

C) dividing the bond’s annual rate of interest by the face value.

D) dividing the face value by the bond’s annual rate of interest.

 

42) Bondholder claims for interest and repayment rank ahead of the claims of stockholders.

 

43) Bond interest expense is tax deductible only after the bond is paid off at maturity.

 

44) When the total amount of a bond issue matures at a certain date at which time the bondholder can convert into shares of stock, the bonds are called convertible bonds.

45) The market rate of interest and the contract rate of interest will always be the same for a bond sold at face value.

 

46) Bonds are long-term interest-bearing notes issued to multiple lenders, usually in increments of $1,000.

 

47) The corporation will repay the principal amount of the bond on the maturity date.

 

48) If a corporation issues serial bonds, each bond will have the same maturity date.

 

49) On January 1, 20XX, Edward Company issued $200,000, 10-year, 8% bonds with semiannual interest payments on June 30 and December 31. Record the 20XX journal entries.

50) On April 1, 20XX, Jones Company issued $200,000, 10-year, 6% bonds with semiannual interest payments on June 30 and December 31. Record the 20XX journal entries.

 

 

 

 



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