Answered: the carrying amount of bonds redeemed…

the carrying amount of bonds redeemed is more than the redemption price, the difference is recorded as a a. discount. O b. premium. O c. gain.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter22: Corporations: Bonds

Section: Chapter Questions

Problem 5TF

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Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

If the carrying amount of bonds redeemed is more than the redemption price, the difference is recorded as a
a. discount.
b. premium.
c. gain.
loss.
O d.

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The carrying value of Bonds Payable equalsa. Bonds Payable plus Discount on Bonds Payable.b. Bonds Payable minus Discount on Bonds Payable.c. Bonds Payable minus Premium on Bonds Payable.d. Bonds Payable plus Accrued Interest.
1. To calculate a gain or loss on redemption of a bond, you compare a. The market interest rate to the contract rate b. The carrying value value of the bond to the proceeds received from the sale of the bond c. The income for the period d. The proceeds to the unamortized premium or discount 2. If the proceeds are greater than the carrying value, you will have a a. gain with a credit balance b. gain with a debit balance c. loss with a debit balance d. loss with a credit balance
interest payment for bonds is calculated using the face value of the bonds and the __________ A. market value B. market interest rate C. stated interest rate D. original cost
The Discount on Bonds Payable accounta. is an expense account.b. is a contra account to Bonds Payable.c. is expensed at the bond’s maturity.d. is a miscellaneous revenue account.
Premium on Bonds Payable has a debit balance. O is a contra account. is deducted from bonds payable on the balance sheet. is considered to be a reduction in the cost of borrowing.
4. What best describes the discount on bonds payable account? a.An asset b.A liability c.An expense d.A contra liability
The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable: Premium on Bonds Payable Deduct Add Deduct Add Discount on Bonds Payable Add Deduct Deduct Add
In the balance sheet, the account, Premium on Bonds Payable, is: OA. classified as a liability account. B. deducted from bonds payable. C. added to bonds payable. OD. A and C
The premium on bonds payable account is shown on the balance sheet as A contra asset. A reduction of an expense. An addition to a long-term liability. A subtraction from a long-term liability.
When bonds are redeemed before maturity, how is the gain or loss on redemption determined? Why does the calculation differ for bonds issued at face value, at a premium, and at a discount?
What kind of account is the Discount on Bonds Payable? What kind of account is the Premium on Bonds Payable?
The effective-interest method of bond amortization finds the difference between the ________ times the ________ and the ________ times the ________. A. stated interest rate, principal, stated interest rate, carrying value B. stated interest rate, principal, market interest rate, carrying value C. stated interest rate, carrying value, market interest rate, principal D. market interest rate, carrying value, market interest rate, principal