FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Which of the following would NOT be included in the journal entry to show the conversion of bonds payable? ( NIE 13) A credit to gain on conversion credit to additional paid in capital debit to bond premium debit to bonds payable
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When a bond is converted into stock, the accounting entry typically involves debiting the bonds payable account for the face value of the bonds, debiting any unamortized discount (if applicable), and crediting the common stock or other equity account for the fair value of the stock issued. There would not be a debit to bond premium because the bond premium account is typically used to record the excess of the bond's issue price over its face value and is amortized over the life of the bond. Since the bond is being converted to equity, there is no longer any bond premium to amortize.
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- Which of the following would not be obtained on a listed debt market?Select one:a. Commercial paper.b. Bonds.c. Various debt issues.d. Long-term loans.arrow_forwardWhich 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 conversionarrow_forwardThe 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.arrow_forward
- 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 Casharrow_forward1. When a company purchases another company's bonds as an investment, an account called investments- XXXX is used. What type of an account and normal balance does this investment account have? a. Asset with a debit balance b. Asset with a credit balance c. liability with a debit balance d. liability with a credit balance 2. What does the word accrued mean when talking about accrued interest? a. The interest has not been earned, but it has been received b. The interest has been earned, but it has not been received c. The interest has not been earned nor received d. The interest is being deferredarrow_forwardDescribe the accounting for bonds payable, including bonds issued at face amount, bonds issued at a discount , nd bonds issued at a premium ?arrow_forward
- 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 issuearrow_forward1. How are the bonds issued, what is the appropriate journal entry? 2. Provide example for issuing bonds.arrow_forwardIf the sale of bonds falls between interest dates, interest accrued since the last interest payment would be O a. added to; debited to Interest Revenue O b. subtracted from; debited to Interest Revenue O c. subtracted from; credited to Interest Revenue O d. added to; credited to Interest Revenue the sale proceeds andarrow_forward
- Question Content Area The journal entry a company makes for the issuance of bonds when the contract rate is less than the market rate would be a. debit Cash, credit Premium on Bonds Payable and Bonds Payable b. debit Cash, credit Bonds Payable c. debit Cash and Discount on Bonds Payable, credit Bonds Payable d. debit Bonds Payable, credit Casharrow_forward8. Discount on Note Payable should be classified as a a. current asset b. contra account to Notes Payable c. part of stockholder's equity d. deferred debtarrow_forward2. The printing costs and accounting/legal fees associated with the issuance of bonds should: (A) Be expensed when incurred. (B) Be reported as a deduction from the face amount of the bonds payable on the balance sheet. (C) Be accumulated in a deferred charge account (unamortized asset) and amortized to expense over the life of the bonds. (D) Be recorded as an expense all in the year the bonds mature or are retired. (E) None of the above.arrow_forward
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