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Principles of Accounting, Volume 1: Financial Accounting

Questions

Principles of Accounting, Volume 1: Financial AccountingQuestions

Questions

1.

LO 13.1What is the difference between callable and putable bonds?

2.

LO 13.1What is the difference between serial bonds and term bonds?

3.

LO 13.1What is a junk bond?

4.

LO 13.1How are savings bonds different from a corporate bond?

5.

LO 13.1What do you have to do to the interest rate and years of maturity if a bond pricing problem tells you that interest is compounded quarterly?

6.

LO 13.2An amortization table/schedule is created to compute the amount to be amortized each year. What are the four columns needed to prepare the table?

7.

LO 13.2In the amortization table, how is the amortization of discount of premium computed?

8.

LO 13.2Does issuing a bond at a discount increase or decrease interest expense over the life of the bond?

9.

LO 13.2What kind of account is the Discount on Bonds Payable? What kind of account is the Premium on Bonds Payable?

10.

LO 13.2Why is the effective-interest method of amortization required under the International Financial Reporting Standards?

11.

LO 13.3If there is neither a premium nor discount present, the journal entry to record bond interest payments is _______.

12.

LO 13.3When do you use the Bond Discount Account?

13.

LO 13.3A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?

14.

LO 13.3A company issued $100,000, 5-year bonds, receiving $97,000. What is the balance sheet presentation immediately after the sale?

15.

LO 13.3Does interest expense increase or decrease when a bond premium is amortized?

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