Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 13, Problem 10MC
The effective-interest method of bond amortization finds the difference between the ________ times the ________ and the ________ times the ________.
A. stated interest rate, principal, stated interest rate, carrying value
B. stated interest rate, principal, market interest rate, carrying value
C. stated interest rate, carrying value, market interest rate, principal
D. market interest rate, carrying value, market interest rate, principal
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interest payment for bonds is calculated using the face value of the bonds and the __________
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market value
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When using the effective−interest amortization method for bonds, the amount of the interest expense is calculated using the carrying amount of the bonds and the ________________________.
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market value
B.
original cost
C.
market interest rate
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stated interest rate
When a bond payable is measured using the fair value model, the interest expense is computed by multiplying the
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present value and effective rate
face value and effective rate
present value and nominal rate
Chapter 13 Solutions
Principles of Accounting Volume 1
Ch. 13 - An amortization table ________. A. breaks each...Ch. 13 - A debenture is ________. A. the interest paid on a...Ch. 13 - The principal of a bond is ________. A. the person...Ch. 13 - A convertible bond can be converted into ________....Ch. 13 - On January 1, a company issued a 5-year $100,000...Ch. 13 - On July 1, a company sells 8-year $250,000 bonds...Ch. 13 - On January 1 a company issues a $75,000 bond that...Ch. 13 - On October 1 a company sells a 3-year, $2,500,000...Ch. 13 - On April 1 a company sells a 5-year, $60,000 bond...Ch. 13 - The effective-interest method of bond amortization...
Ch. 13 - When a bond sells at a discount, the carrying...Ch. 13 - The International Financial Reporting Standards...Ch. 13 - The cash interest payment a corporation makes to...Ch. 13 - Whirlie Inc. issued $300,000 face value, 10% paid...Ch. 13 - Naval Inc. issued $200,000 face value bonds at a...Ch. 13 - Keys Inc. issued 100 bonds with a face value of...Ch. 13 - Huang Inc. issued 100 bonds with a face value of...Ch. 13 - OShea Inc. issued bonds at a face value of...Ch. 13 - Gingko Inc. issued bonds with a face value of...Ch. 13 - The difference between equity financing and debt...Ch. 13 - What is the difference between callable and...Ch. 13 - What is the difference between serial bonds and...Ch. 13 - What is a junk bond?Ch. 13 - How are savings bonds different from a corporate...Ch. 13 - What do you have to do to the interest rate and...Ch. 13 - An amortization table/schedule is created to...Ch. 13 - In the amortization table, how is the amortization...Ch. 13 - Does issuing a bond at a discount increase or...Ch. 13 - What kind of account is the Discount on Bonds...Ch. 13 - Why is the effective-interest method of...Ch. 13 - If there is neither a premium nor discount...Ch. 13 - When do you use the Bond Discount Account?Ch. 13 - A company issued bonds with a $100,000 face value,...Ch. 13 - A company issued $100,000, 5-year bonds, receiving...Ch. 13 - Does interest expense increase or decrease when a...Ch. 13 - Halep Inc. borrowed $30,000 from Davis Bank and...Ch. 13 - Beluga Inc. issued 10-year bonds with a face value...Ch. 13 - Krystian Inc. issued 10-year bonds with a face...Ch. 13 - On January 1, 2018, Wawatosa Inc. issued 5-year...Ch. 13 - Diana Inc. issued $100,000 of its 9%, 5-year bonds...Ch. 13 - Oak Branch Inc. issued $700,000 of 5%, 10-year...Ch. 13 - On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds...Ch. 13 - Medhurst Corporation issued $90,000 in bonds for...Ch. 13 - On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds...Ch. 13 - Pinetop Corporation issued $150,000 10-year bonds...Ch. 13 - Medhurst Corporation issued $90,000 in bonds for...Ch. 13 - Sharapovich Inc. borrowed $50,000 from Kerber Bank...Ch. 13 - Waylan Sisters Inc. issued 3-year bonds with a par...Ch. 13 - Smashing Cantaloupes Inc. issued 5-year bonds with...Ch. 13 - Chung Inc. issued $50,000 of 3-year bonds on...Ch. 13 - Haiku Inc. issued $600,000 of 10-year bonds with a...Ch. 13 - Waldron Inc. issued $400,000 bonds with a stated...Ch. 13 - Willoughby Inc. issued 100 bonds with a face value...Ch. 13 - Allante Corporate issued 50 bonds with a face...Ch. 13 - Roo Incorporated issued 50 bonds with a face value...Ch. 13 - Piedmont Corporation issued $200,000 of 10-year...Ch. 13 - Lunar Corporation issued $80,000 in bonds for...Ch. 13 - On January 1, 2018, King Inc. borrowed $150,000...Ch. 13 - On July 1, Somerset Inc. issued $200,000 of 10%,...Ch. 13 - Eli Inc. issued $100,000 of 8% annual, 5-year...Ch. 13 - Evie Inc. issued 50 bonds with a $1,000 face...Ch. 13 - Volunteer Inc. issued bonds with a $500,000 face...Ch. 13 - Aggies Inc. issued bonds with a $500,000 face...Ch. 13 - Sub-Cinema Inc. borrowed $10,000 on Jan. 1 and...Ch. 13 - Charleston Inc. issued $200,000 bonds with a...Ch. 13 - Starmount Inc. sold bonds with a $50,000 face...Ch. 13 - Irving Inc. sold bonds with a $50,000, 10%...Ch. 13 - Dixon Inc. issued bonds with a $500,000 face...Ch. 13 - Edward Inc. issued bonds with a $500,000 face...Ch. 13 - Below is select information from two, independent...Ch. 13 - Assume you are a newly-hired accountant for a...
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Similar questions
- 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 balancearrow_forwardWhen the effective-interest method is used, the amount of bond discount amortized eachinterest period is equal to thea. amount of interest expense less the cash paid for interest.b. amount of interest expense plus the cash paid for interest.c. face value of the bond times the market interest rate at the date of issue.d. face value of the bond times the stated interest rate.arrow_forwardIf the carrying amount of bonds redeemed is more than the redemption price, the difference is recorded as a a. discount. b. premium. c. gain. loss. O d.arrow_forward
- The rate of interest actually earned by bondholders is called the Select one: O a. effective rate. O b. stated rate. O c. effective yield or market rate. O d. yield rate.arrow_forwardDistinguish between the following interest rates for bonds payable:(a) Yield rate. (d) Market rate.(b) Nominal rate. (e) Effective rate.(c) Stated rate.arrow_forwardUnder the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to Select one: a. the market rate multiplied by the beginning-of-period carrying amount of the bonds b. the stated (nominal) rate of interest multiplied by the face value of the bonds. c. the stated rate multiplied by the beginning-of-period carrying amount of the bonds. 17arrow_forward
- Define the following Bond related terms: Issue Date Face Amount Term Contract Rate Payment Frequency Interest Payment Amount Bond Proceeds Market (effective) rate Maturity Amountarrow_forwardThe effective interest technique is used to charge a discount on a bond that is due to be paid to interest cost. true or falsearrow_forwardThe interest rate stated on the bond is known as:(a) effective rate. (c) nominal rate.(b) market rate. (d) real ratearrow_forward
- When the initial present value of a bond payable is higher than its face amount, an entity would usually ________ the _______________________ account when recording amortization of interests. debit; Premium on Note Receivable credit; Premium on Note Receivable debit; Interest Expense credit; Interest Expensearrow_forward. Distinguish between the following values relative to bonds payable: a. Maturity value. b. Face value. c. Market (fair) value. d. Par value.arrow_forwardWhen 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 samearrow_forward
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