10 fast questions

1. A $600,000 bond was retired at 98 when the carrying value of the bond was $592,000. The entry to record the retirement would include a (Points : 2)       gain on bond redemption of $8,000.

      loss on bond redemption of $8,000.

      loss on bond redemption of $4,000.

      gain on bond redemption of $4,000.

Question 2. 2. Bond interest paid is (Points : 2)       higher when bonds sell at a discount.

      lower when bonds sell at a premium.

      the same whether bonds sell at a discount or a premium.

      higher when bonds sell at a discount and lower when bonds sell at a premium.

Question 3. 3. A bond with a face value of $200,000 and a quoted price of 102¼ has a selling price of (Points : 2)       $240,450.

      $204,050.

      $200,450.

      $204,500.

Question 4. 4. Lake Company received proceeds of $188,500 on 10-year, 8% bonds issued on January 1, 2011. The bonds had a face value of $200,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Lake uses the straight-line method of amortization.

What is the amount of interest Lake must pay the bondholders in 2011? (Points : 2)

      $15,080

      $16,000

      $17,150

      $14,850

Question 5. 5. Jarmin Company received proceeds of $188,500 on 10-year, 8% bonds issued on January 1, 2011. The bonds had a face value of $200,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Jarmin uses the straight-line method of amortization.

What is the carrying value of the bonds on January 1, 2013? (Points : 2)

      $200,000

      $190,800

      $197,700

      $189,650

Question 6. 6. A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a (Points : 2)       gain on bond redemption of $18,000.

      loss on bond redemption of $12,000.

      loss on bond redemption of $18,000.

      gain on bond redemption of $4,000.

Question 7. 7. If bonds with a face value of $150,000 are converted into common stock when the carrying value of the bonds is $135,000, the entry to record the conversion will include a debit to (Points : 2)       Bonds Payable for $150,000.

      Bonds Payable for $135,000.

      Discount on Bonds Payable for $15,000.

      Bonds Payable equal to the market price of the bonds on the date of conversion.

Question 8. 8. A bond trustee does not (Points : 2)       issue the bonds.

      keep a record of each bondholder.

      hold conditional title to pledged property.

      maintain custody of unsold bonds.

Question 9. 9. Lark Corporation retires its $800,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $829,960. The entry to record the redemption will include a (Points : 2)       credit of $10,040 to Loss on Bond Redemption.

      debit of $10,040 to Loss on Bond Redemption.

      credit of $10,040 to Premium on Bonds Payable.

      debit of $40,000 to Premium on Bonds Payable.

Question 10. 10. Hernandez Corporation issues 3,000, 10-year, 8%, $1,000 bonds dated January 1, 2012, at 98. The journal entry to record the issuance will show a (Points : 2)       debit to Cash of $3,000,000.

      credit to Discount on Bonds Payable for $60,000.

      credit to Bonds Payable for $3,040,000.

      debit to Cash for $2,960,000.