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Exam 11: Long-Term Liabilities

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Question 21

True/False

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It is the issuer rather than the bond holder who may exercise the call feature of a callable bond.

A) True
B) False

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Question 22

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Most bonds issued today are registered bonds rather than coupon bonds.

A) True
B) False

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Question 23

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An $80,000 bond issue priced at 97 is sold for $77,600.

If a bond has a face interest rate of 6 percent,a face value of $40,000,and pays interest semiannually,each interest payment will amount to $1,200.

Unamortized Bond Premium is subtracted from Bonds Payable on the balance sheet.

Weller Co.issued $600,000 of 30-year,8 percent bonds at 106 on one of its semiannual interest dates.The straight-line method of amortization is to be used.What is the total interest cost of the bonds?

Under a capital lease,the lessee,not the lessor,should record depreciation.

Issuing bonds between interest payment dates will have the effect of decreasing a bond issuance discount or increasing a bond issuance premium.

Unsecured bonds are also known as debentures.

A corporation's bondholders are the primary recipients of financial leverage.

As the interest coverage ratio declines,the risk for creditors also declines.

When bonds have been issued at a discount the periodic amortization of the discount will

Under an operating lease,the lessee records which of the following?

Pelican Company issued $200,000 of 20-year,6 percent bonds at 98 on one of its semiannual interest dates.The straight-line method of amortization is to be used. -After seven years,what is the carrying value of the bonds?

The call price of bonds is usually above face value.

The entry to record the issuance of bonds at a premium includes a credit to the Unamortized Bond Premium account.

Under a capital lease,the lessee does all of the following except:

On January 2,20x5,Fresh Inc.issued 20-year bonds payable with a face value of $1,000,000 and a face interest rate of 10 percent.The bonds were issued to yield a market interest rate of 9 percent.Interest is payable semi-annually on January 1 and July 1.In calculating the present value of the bond issue of January 2,20x5. -The factor used to calculate the present value of the $1,000,000 is

The amount of cash received on issuance of a 9 percent,$10,000 bond dated February 1 and issued June 1 at 102 1/2 is

Any unamortized bond discount should be reported on the balance sheet of the issuing corporation as a(n)