The Singletary Company issued a $500,000, 5-year, 6% bond at par. It is a semiannual bond with interest paid on June 30th and December 31st. The entry to record the sale of the bond would include a:
A. $500,000 credit to Cash.
B. $500,000 debit to Accounts Payable.
C. $30,000 credit to Bonds Payable.
D. $500,000 credit to Bonds Payable.
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TheSingletaryCompanyissueda$500,000,5-year,6%bondatpar.ItisasemiannualbondwithinterestpaidonJune30thandDecember31st.Theentrytorecordthesemiannualinterestpaymentis:
A. InterestExpense$30,000Cash$30,000
B. InterestExpense$15,000Cash$15,000
C. InterestExpense$30,000InterestPayable$30,000
D. InterestExpense$15,000InterestPayable$15,000
Which of the following current liabilities is/are a known amount?
A. Unearned Revenue
B. Accounts Payable
C. Payroll Liabilities
D. All of the above are known amounts.
Which of the following statements is true in relationship to a company financing with debt rather than stock?
A. The principal amount must be repaid at the maturity of the bonds.
B. Trading on equity means that the business earns less by investing borrowed funds than it pays in interest expense on bonds.
C. Earnings per share will generally be higher when a company is financed with stock rather than debt.
D. Interest expense is not tax-deductible while dividends are tax-deductible.
On January 1st, XYZ Company issued $200,000, 5-year, 4% bonds. The market rate at the time of the sale was greater than 4% so the bonds were sold at 93. Interest is payable June 30th and December 31st. The entry to record the sale of the bonds would include a:
A. Debit to Cash for $200,000.
B. Credit to Cash for $186,000.
C. Debit to Discount on Bonds Payable for $14,000.
D. Credit to Bonds Payable for $186,000.
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