29 Jun Question .0pt;text-align:justify;text-indent: -36.0pt;tab-stops:decimal 18.0pt left 36.0pt 54.0pt”> 61. When authorizing bonds to be issued, the board of directors does not specify the
Question
.0pt;text-align:justify;text-indent: -36.0pt;tab-stops:decimal 18.0pt left 36.0pt 54.0pt”> 61. When authorizing bonds to be issued, the board of directors does not specify the
a. total number of bonds authorized to be sold.
b. contractual interest rate.
c. selling price.
d. total face value of the bonds.
62. The following exhibit is for Kmart bonds.
Bonds Close Yield Volume Net Change
Kmart 8 3/8 17 100¼ 8.4 35 +7/8
The contractual interest rate of the K mart bonds is
a. greater than the market interest rate.
b. less than the market interest rate.
c. equal to the market interest rate.
d. not determinable.
63. The following exhibit is for Kmart bonds.
Bonds Close Yield Volume Net Change
Kmart 8 3/8 17 100¼ 8.4 35 +7/8
On the day of trading referred to above,
a. no Kmart bonds were traded.
b. bonds with market prices of $3,500 were traded.
c. at closing, the selling price of the bond was higher than the previous day’s price.
d. the bond sold for $100.25
64. A $1,000 face value bond with a quoted price of 97 is selling for
a. $1,000.
b. $970.
c. $907.
d. $97.
65. A bond with a face value of $200,000 and a quoted price of 102¼ has a selling price of
a. $240,450.
b. $204,050.
c. $200,450.
d. $204,500.
66. Premium on Bonds Payable
a. has a debit balance.
b. is a contra account.
c. is considered to be a reduction in the cost of borrowing.
d. is deducted from bonds payable on the balance sheet.
67. If the market interest rate is greater than the contractual interest rate, bonds will sell
a. at a premium.
b. at face value.
c. at a discount.
d. only after the stated interest rate is increased.
68. On January 1, 2012, Carter Corporation issued $5,000,000, 10-year, 8% bonds at 103. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2010 is
a. Cash…………………………………………………………………………… 5,000,000
Bonds Payable…………………………………………………….. 5,000,000
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