Question 1
The entry to record the issuance of a bond between interest payment dates will include a __________.
A. debit to Cash; credit to Bonds Payable; credit to Bonds Interest Payable
B. debit to Bonds Payable; credit to Cash
C. debit to Bond Interest Expense; credit to Bond Interest Payable
D. debit to Bond Interest Payable; credit to Bond Interest Expense
Question 2
Bonds are issued for $80,000 at 12% on November 1. What is the adjusting entry on December 31?
Question 3
On October 1, Indiana Company issued $10,000, 8%, five-year bonds at 98. What is the adjusting entry on December 31 using straight-line method?
Question 4
Assume the following account balances immediately after an interest payment date:
If the bonds are retired immediately at a total cost of $104,000, the journal entry to record this event is __________.
Question 5
For a corporation, a premium on bonds results when __________.
A. the contract rate is greater than the market rate
B. the contract rate is less than the market rate
C. the face value is greater than the effective rate
D. none of the above
Question 6
On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 102. What is the adjusting entry on December 31 using the straight-line method?