Question

n stock is issued for an amount greater than par value 8. should be credited to a. Retained Earnings b. Cash c. Legal Capital d. Paid-in Capital in Excess of Par e. Unrealized Holding Gains and Losses-Equity to record the amortization of a premium on bonds payable is a. Premium on Bonds Payable b. Interest Expense c. Interest Expense d. Bonds Payable e. Premium on Bonds Payable Interest Expense Premium on Bonds Payable Cash Interest Expense Interest Payable Acorp ration issues for cash$1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%. The interest method is adopted for the amortization of bond discount or premium. Which of the following statements is true? 10. a. The amount of the annual interest expense is computed at 10% of the bond b. The amount of the annual interest expense gradually decreases over the c. The amount of the unamortized discount decreases from its balance at the d. The amount of unamortized premium decreases from its balance at the e. The price of the bonds is equal to the sum of interest payments and face carrying amount at the beginning of the year. life of the bonds. issuance date to a zero balance at the maturity date. issuance date to a zero balance at the maturity date. amount of the bonds. 11. The journal entry a corporation records for the issuance of bonds when the contract rate is greater than the market rate would be a. debit Bonds Payable; credit Cash b. debit Cash and Discount on Bonds Payable; credit Bonds Payable credit Premium on Bonds Payable and Bonds Payable debit Cash; d. debit Cash; credit Bonds Payable c. debit Cash; credit Bonds Payable and Interest Payable

Answer 1

8
The excess should be credited to Paid-in capital in excess of par
9
Premium on Bonds payable
Interest expense
10
The amount of unamortized discount decreases from its balance at the issuance date to a zero balance at the maturity date
11
Debit cash; credit Premium on Bonds payable and Bonds payable