d. Cash 00,000 Bonds Payable 100,000 11) War Eagle Productions recently sold its
ID: 2574061 • Letter: D
Question
d. Cash 00,000 Bonds Payable 100,000 11) War Eagle Productions recently sold its $2,000,000 bonds for 1,940,000. The bonds have a 10 year life and carried an interest rate of 10% while the market rate was i2%, what is the carrying Value of the bonds on the date of sale? a. 2,000,000 b. 200,000 c. 240,000 d. 1,940,000 12) Which of the following not true about bonds and long term liabilities a. b. c. d. Selling bonds at a premium decreases the total cost of borrowing Selling bonds at a discount increases the total cost of borrowing Companies Bonds selling at a discount have a lower interest rate than the market will book interest expense, but will not pay cash until maturity of the bonds 13) Shug Jordan Co has bonds with a face value of $150,000 selling at 101. The bonds have a 5 year quarter. The stated rate on the bonds is 9%, The Market rate on the life with interest paid each bonds is 8%. what is Shug Jordan Co's total cost of borrowing? a. 270,000 b. 268,500 c. 271,500 d. 300,000 14) On January 1, 2015, Kerry Co issued bonds with a face value of $4,000,000 at 102. The bonds have a 10 year life and interest is paid semiannually. The interest rate on the bonds was 7% with a market rate of 5%, what amount of the premium is unamortized on December 31, 2017 a. 56,000 b. 24,000 c. 80,000 d. 78,000 15) Which of the following is not a step involved in retirement of bonds before maturity? a. b. c. d. Accounting for gain/loss Update Call Price of Bond Update Carrying Value of bond Compare Call Price to Carrying Value 16) Unamortized discounts on bonds payable should be reported on the balance sheet of the issuer as: a. Direct deduction from the face amount of the debt b. Direct deduction from the present value of the debt c. Deferred charge d. Part of issuance costExplanation / Answer
#14. c) 80000
The difference between the par-value or face-value of a bond and the price above this face value, at which the bond has been issued. Unamortized bond premiums do not include any interest that has been amortized or written off. Bonds with face value of $4000000 at 102 means 102% of $4000000 equals $4080000(issued price)
So $4080000-$4000000=$80000
face value-issue price=Unamortized bond premiums
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