FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Accounting for Long-Term Debt

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

[The following information applies to the questions displayed below.] On January 1, Year 1, The Palms borrowed $200,000 to purchase a warehouse by agreeing to an 8%, 5-year note with the bank. Payments of $50,091.29 are due at the end of each year. The first payment will be made on December 31, Year 1. -What is the interest expense for Year 1 and Year 2,respectively? (Round your final answers to the nearest dollar.)

A) $3,200 and $14,000
B) $16,000 and $16,350
C) $16,000 and $13,273
D) $20,625 and $16,000

E) A) and C)
F) B) and C)

Correct Answer

verified

Show Answer

Question 62

True/False

Review LaterAdd Note

Review Later

If a company chooses to call some of its callable bonds before their maturity,generally it will have to pay an amount that is greater than the carrying value of the bonds.

A) True
B) False

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Kier Company issued $200,000 in bonds on January 1,Year 1.The bonds were issued at face value and carried a 4-year term to maturity.The bonds have a 6.5% stated rate of interest and interest is payable in cash on December 31 each year.Based on this information alone,what are the amounts of interest expense and cash flows from operating activities,respectively,that will be reported in the financial statements for the year ending December 31,Year 1?

The times-interest-earned ratio is calculated by which of the following?

What is the name used for the type of secured bond that requires a pledge of a designated piece of property in case of default?

The times-interest-earned ratio is usually calculated as the ratio of net income to interest expense.

The effective rate of interest for a particular bond issue is the market rate of interest for other investments with similar levels of risk.

Loans that require payment of interest at regular intervals and payment of principal at maturity are installment notes.

King Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on King's statements?

Which of the following statements regarding the stated rate of interest is true if a bond is sold at 101?

If a bond issuer's bond ratings drop,the company probably will have to pay higher interest rates on bonds that have already been issued.

On January 1,Year 1,Hanover Corporation issued bonds with a $70,500 face value,a stated rate of interest of 8%,and a 5-year term to maturity.The bonds were issued at 97.Hanover uses the straight-line method to amortize bond discounts and premiums.Interest is payable in cash on December 31 each year. How much interest expense will Hanover report on its income statement on December 31,Year 1?