The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable: O Premium on Bonds Payable Deduct Add Deduct Add Discount on Bonds Payable Add Deduct Deduct Add

The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable: O Premium on Bonds Payable Deduct Add Deduct Add Discount on Bonds Payable Add Deduct Deduct Add

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following would NOT be included in the journal entry to show the conversion of bonds payable? O A credit to additional paid in capital O A debit to bonds payable O A debit to bond premium O A credit to gain on conversion
Explain details
When bonds are issued at a discount and the effective interest method is used for amortization, at each successive interest payment date, the interest expense: Select one: a. Increases b. Is equal to the change in market value of the bonds c. Decreases d. Is equal to the change in carrying value of the bonds e. Stays the same
The carrying value of Bonds Payable equalsa. Bonds Payable plus Discount on Bonds Payable.b. Bonds Payable minus Discount on Bonds Payable.c. Bonds Payable minus Premium on Bonds Payable.d. Bonds Payable plus Accrued Interest.
When does a premium on bonds payable occur?
The journal entry a company makes for the issuance of bonds when the contract rate is less than the market rate would be Oa. debit Cash and Discount on Bonds Payable, credit Bonds Payable Ob. debit Cash, credit Bonds Payable Oc. debit Cash, credit Premium on Bonds Payable and Bonds Payable Od. debit Bonds Payable, credit Cash
Will the amortization of Discount on Bonds Payable result in a higher or lower Bond Interest Expense? Explain.
1. To calculate a gain or loss on redemption of a bond, you compare a. The market interest rate to the contract rate b. The carrying value value of the bond to the proceeds received from the sale of the bond c. The income for the period d. The proceeds to the unamortized premium or discount 2. If the proceeds are greater than the carrying value, you will have a a. gain with a credit balance b. gain with a debit balance c. loss with a debit balance d. loss with a credit balance
When determining the amount of interest to be paid on a bond, which of the following information is not necessary? a. The length of the interest period, annually or semiannually b. The face rate of interest on the bonds c. The face amount of the bonds d. The selling price of the bonds
Describe the accounting for bonds payable, including bonds issued at face amount, bonds issued at a discount , nd bonds issued at a premium ?
Amortizing the discount and premium on bonds is done in two ways. Describe each one.
A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following? Select one: a. An overpayment for a bond purchase b. An underpayment for a bond purchase c. The current amount of amortization expense d. The unamortized amount of premium earned on a bond issue