indicate whether each of the following statements about bonds payable is true or false.
indicate whether each of the following statements about bonds payable is true or false.
a) At the time of issue, the effective interest rate of a particular bond is equal to the market rate of interest for bonds with a similar level of risk
b) When bonds are sold at 105, the stated interest rate of the bonds is lower than the market rate for investments with a similar level of risk.
c) When bonds are sold at 95, the stated interest rate of the bonds is lower than the market rate for investments with a similar level of risk.
d) When bonds are sold at 100, the stated interest rate of the bonds is lower than the market rate for investments with a similar level of risk.
e) When bonds are sold at 101, the bonds were issued at a premium.
Homework Answers
rate positively ..
| Question | answer | reason |
| a) | TRUE | At the time of issue effective interest rate = Market rate |
| b) | FALSE | when bond is sold at premium coupon rate is higher than effective rate of interest |
| c) | TRUE | when bond is sold at discount coupon rate is lower than effective rate of interest |
| d) | FALSE | This bond is sold at Par |
| e) | TRUE | yes true statement |
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indicate whether each of the following statements about bonds payable is true or false.
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1. On January 1, Year 1, Price Co. issued $393,000 of five-year, 6 percent bonds at...
1. On January 1, Year 1, Price Co. issued $393,000 of five-year,
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Required
Prepare the journal entries to record the bond transactions for
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- Record the entry for issuance of bonds
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Prepare the journal entries to record the bond transactions for
Year 1 and Year 2.
- Record the entry for issuance of bonds
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