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Exam 14: Long-Term Liabilities

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Question 81

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The amortization of bond premium increases interest expense over the life of the bonds.

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Question 82

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Bonds Payable are reported on the balance sheet as the balance in Bonds Payable plus any discount or minus any premium.

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Question 83

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The market rate is the rate used to calculate the actual cash payments made to bondholders.

The principal amount is $80,000, the stated rate is 10%, and the term of the bond is 8 years. The bond pays interest semiannually. At the time of issue, the market rate is 9%. What is the present value of the bond at the market rate?

On December 1, 2015, Fine Products borrowed $80,000 on a 4%, 8-year note with annual installment payments of $10,000 plus interest due on December 1 of each succeeding year. Which of the following describes the first installment payment made on December 1, 2016?

The current portion of notes payable is the principal amount that will be paid within two years of the balance sheet date and the remaining portion is long term.

The interest rate that investors demand in order to loan their money is known as the:

On November 1, 2015, EZ Products borrowed $48,000 on a 5%, 10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year. On November 1, 2016, what will the balance be in the Long-Term Notes Payable account?

On March 21, 2013, the bond accounts of Urban Sales showed the following balances. Urban Sales retires the bonds for $66,150. What will be the journal entry to retire the bonds?

Premium on Bonds Payable is considered to be an additional Interest Expense of the company that issues the bond.

The United Way Payable account would normally be shown on the balance sheet under current liabilities.