1. the torrez corporation issue a $1,000, 10-year bonds, 8%, $1,000 bonds dated jan 1,2007 at 97. the journal entry to record the issuance will show a
a.credit to discount on bonds payable for $30,000
b.debit to cash of $1,000,000
c.credit to bonds payable for $1,000,000
d.credit to cash for $970,000
2. bonds with a face amount $1,000,000 are sold at 97. the entry to record the issuance is
a.Cash $1,000,000
Premium on bonds payable $30,000
Bonds Payable $970,000
b.Cash $970,000
Premium on bonds payable $30,000
bonds payable $1,000,000
c.Cash $970,000
Discount on bonds payable $30,000
Bonds payable $1,000,000
d.Cash $970,000
Bonds Payable $970,000
3. the cash and securities comprising a sinking fund established to redeem bonds at maturity in 2015 should be classified on the balance sheet as
a.fixed asset
b.current asset
c.intangable assets
d.investments
4. when callable bonds are redeemed below carrying value
a. gain on redemption of bonds is credited
b.loss on redemption of bonds is debited
c.retained earnings is credited
d.retained earnings is debited
5. bonds payable has a balance of $1,000,000 and discount on bonds payable has a balance of $15,500. If the issuince corporation redeems the bonds at 99, what is the amount of gain or loss on redemption?
a.$5,500 loss
b.$15,500 loss
c.$15,500 gain
d.$5,500 gain