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HW-1231 Accounting set-1
Question 1 of 20
Jordan issued $400,000, 10-year, 9% bonds to yield 11%. Interest is payable annually. Using factors from the present value tables in Appendix I near the end of your text, which of the following would be the journal entry to record the issuance of these bonds?
A.
B.
C.
D.
Question 2 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the bond carrying amount (book value) at the end of Year 1?
A. $88,482
B. $96,482
C. $100,000
D. $100,771
Question 3 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the bond interest expense for Year 1?
A. $8,000
B. $8,771
C. $10,000
D. $10,771
Question 4 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the amount of cash interest paid on the bonds in Year 1?
A. $7,017
B. $8,000
C. $8,771
D. $10,000
Question 5 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the amount of bond discount amortization for Year 2?
A. $848
B. $1,229
C. $1,540
D. $2,000
Question 6 of 20
Will Company issued $100,000 worth of bonds on January 1, Year 3 with interest payable annually. The bonds had a contract rate of 8%. The bonds were set up as floating-rate debt with the rate benchmarked to LIBOR plus 3%. The entry to record the sale (issuance) of the bonds would be which one of the following?
A.
B.
C.
D.
Question 7 of 20
Will Company issued $100,000 worth of bonds on January 1, Year 3 with interest payable annually. The bonds had a contract rate of 8%. The bonds were set up as floating-rate debt with the rate benchmarked to LIBOR plus 3%. What would interest expense for year one be if LIBOR is 5%?
A. $3,000
B. $5,000
C. $8,000
D. $9,000
Question 8 of 20
Research on debt-for-equity swaps has shown that most of these swaps have resulted in an extinguishment gain. Therefore, some analysts have argued that debt-for-equity swaps have been undertaken to:
A. negatively alter capital structure.
B. provide no alteration of capital structure.
C. provide no real economic benefit.
D. smooth transitory decreases in quarterly earnings.
Question 9 of 20
Which one of the following contingencies must be accrued on the balance sheet?
A. The probable loss on a lawsuit that the firm's attorneys believe will be dropped
B. The probable loss on a lawsuit that the firm's attorneys believe will be settled for $90,000
C. The reasonably possible loss on a lawsuit that the firm's attorneys believe will be incurred, but the amount is unknown
D. The reasonable possible loss on a lawsuit that the firm's attorneys believe will be settled for $90,000
Question 10 of 20
A probable future sacrifice of an economic benefit arising from a present obligation to transfer assets or provide services to other entities in the future as a result of a past transaction is a/an:
A. asset.
B. liability.
C. equity.
D. expense.
Question 11 of 20
Strauss Company sold $100,000 worth of long-term bonds in the open market for $100,000. The entry to record the transaction would be:
A.
B.
C.
D.
Question 12 of 20
When the effective yield of a bond is the same as the coupon rate on the bond, the bond is sold at:
A. a discount.
B. a premium.
C. par.
D. a price above par.
Question 13 of 20
Theta Company has prepared to sell bonds with a coupon rate of 6% when the market rate is 8%. These bonds will sell in the market at:
A. par.
B. a discount.
C. a premium.
D. stated value.
Question 14 of 20
Amortization of discount on bonds payable (bond discount) results in which of the following?
A. A decrease in bond interest expense
B. An increase in net income
C. An increase in the carrying value of the bond
D. An increase in stockholders' equity due to the decrease in bond interest expense
Question 15 of 20
Which of the following statements is correct?
A. Amortization of discount on bonds payable (bond discount) results in an increase in a bond's carrying value.
B. Amortization of discount on bonds payable (bond discount) results in a decrease in bond interest expense.
C. Amortization of premium on bonds payable (bond premium) results in an increase in a bond's carrying value.
D. Amortization of premium on bonds payable (bond premium) results in an increase in bond interest expense.
Question 16 of 20
Floating-rate debt is the most common method for lenders to protect themselves from losses that arise as a result of:
A. increases in the market interest rate.
B. decreases in the market interest rate.
C. increases in the stated interest rate on bonds.
D. decreases in the coupon rate on bonds.
Question 17 of 20
Some financial analysts contend that reporting debt at amortized historical cost rather than current market value:
A. makes it more difficult to manipulate accounting numbers.
B. makes it easier to manipulate accounting numbers.
C. has no impact on the accounting numbers.
D. makes it impossible to manipulate the accounting numbers.
Question 18 of 20
When two parties agree to the sale of some asset or commodity on some specified future date at a price specified today it is a/an:
A. forward contract.
B. swap contract.
C. performance contract.
D. options contract.
Question 19 of 20
A derivative security that gives the holder the right but not the obligation to do something is a/an:
A. future contract.
B. swap contract.
C. performance contract.
D. options contract.
Question 20 of 20
A contingent liability that is probable and can be reasonably estimated will immediately result in:
A. an increase in both liabilities and stockholders' equity.
B. an increase in liabilities and a decrease in net income.
C. an increase in liabilities without any need for financial statement disclosure.
D. an increase in liabilities and a decrease in assets.
Answer will be sent by email as attachment.
Jordan issued $400,000, 10-year, 9% bonds to yield 11%. Interest is payable annually. Using factors from the present value tables in Appendix I near the end of your text, which of the following would be the journal entry to record the issuance of these bonds?
A.
B.
C.
D.
Question 2 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the bond carrying amount (book value) at the end of Year 1?
A. $88,482
B. $96,482
C. $100,000
D. $100,771
Question 3 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the bond interest expense for Year 1?
A. $8,000
B. $8,771
C. $10,000
D. $10,771
Question 4 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the amount of cash interest paid on the bonds in Year 1?
A. $7,017
B. $8,000
C. $8,771
D. $10,000
Question 5 of 20
Concord Inc. issues (sells) $100,000 of its 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289. What is the amount of bond discount amortization for Year 2?
A. $848
B. $1,229
C. $1,540
D. $2,000
Question 6 of 20
Will Company issued $100,000 worth of bonds on January 1, Year 3 with interest payable annually. The bonds had a contract rate of 8%. The bonds were set up as floating-rate debt with the rate benchmarked to LIBOR plus 3%. The entry to record the sale (issuance) of the bonds would be which one of the following?
A.
B.
C.
D.
Question 7 of 20
Will Company issued $100,000 worth of bonds on January 1, Year 3 with interest payable annually. The bonds had a contract rate of 8%. The bonds were set up as floating-rate debt with the rate benchmarked to LIBOR plus 3%. What would interest expense for year one be if LIBOR is 5%?
A. $3,000
B. $5,000
C. $8,000
D. $9,000
Question 8 of 20
Research on debt-for-equity swaps has shown that most of these swaps have resulted in an extinguishment gain. Therefore, some analysts have argued that debt-for-equity swaps have been undertaken to:
A. negatively alter capital structure.
B. provide no alteration of capital structure.
C. provide no real economic benefit.
D. smooth transitory decreases in quarterly earnings.
Question 9 of 20
Which one of the following contingencies must be accrued on the balance sheet?
A. The probable loss on a lawsuit that the firm's attorneys believe will be dropped
B. The probable loss on a lawsuit that the firm's attorneys believe will be settled for $90,000
C. The reasonably possible loss on a lawsuit that the firm's attorneys believe will be incurred, but the amount is unknown
D. The reasonable possible loss on a lawsuit that the firm's attorneys believe will be settled for $90,000
Question 10 of 20
A probable future sacrifice of an economic benefit arising from a present obligation to transfer assets or provide services to other entities in the future as a result of a past transaction is a/an:
A. asset.
B. liability.
C. equity.
D. expense.
Question 11 of 20
Strauss Company sold $100,000 worth of long-term bonds in the open market for $100,000. The entry to record the transaction would be:
A.
B.
C.
D.
Question 12 of 20
When the effective yield of a bond is the same as the coupon rate on the bond, the bond is sold at:
A. a discount.
B. a premium.
C. par.
D. a price above par.
Question 13 of 20
Theta Company has prepared to sell bonds with a coupon rate of 6% when the market rate is 8%. These bonds will sell in the market at:
A. par.
B. a discount.
C. a premium.
D. stated value.
Question 14 of 20
Amortization of discount on bonds payable (bond discount) results in which of the following?
A. A decrease in bond interest expense
B. An increase in net income
C. An increase in the carrying value of the bond
D. An increase in stockholders' equity due to the decrease in bond interest expense
Question 15 of 20
Which of the following statements is correct?
A. Amortization of discount on bonds payable (bond discount) results in an increase in a bond's carrying value.
B. Amortization of discount on bonds payable (bond discount) results in a decrease in bond interest expense.
C. Amortization of premium on bonds payable (bond premium) results in an increase in a bond's carrying value.
D. Amortization of premium on bonds payable (bond premium) results in an increase in bond interest expense.
Question 16 of 20
Floating-rate debt is the most common method for lenders to protect themselves from losses that arise as a result of:
A. increases in the market interest rate.
B. decreases in the market interest rate.
C. increases in the stated interest rate on bonds.
D. decreases in the coupon rate on bonds.
Question 17 of 20
Some financial analysts contend that reporting debt at amortized historical cost rather than current market value:
A. makes it more difficult to manipulate accounting numbers.
B. makes it easier to manipulate accounting numbers.
C. has no impact on the accounting numbers.
D. makes it impossible to manipulate the accounting numbers.
Question 18 of 20
When two parties agree to the sale of some asset or commodity on some specified future date at a price specified today it is a/an:
A. forward contract.
B. swap contract.
C. performance contract.
D. options contract.
Question 19 of 20
A derivative security that gives the holder the right but not the obligation to do something is a/an:
A. future contract.
B. swap contract.
C. performance contract.
D. options contract.
Question 20 of 20
A contingent liability that is probable and can be reasonably estimated will immediately result in:
A. an increase in both liabilities and stockholders' equity.
B. an increase in liabilities and a decrease in net income.
C. an increase in liabilities without any need for financial statement disclosure.
D. an increase in liabilities and a decrease in assets.
Answer will be sent by email as attachment.
