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Accounting for Bonds & Notes Payable Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. What does the r in the formula shown in the image below represent?

Question 2 2. What is the weighted average cost of capital?

Question 3 3. A bond that is discounted _____.

Use this material to answer questions #4 through #5

Golden Horse Company issued a non-interest bearing note payable to its local credit union. The loan proceeds were $22,000 and the maturity value is $25,000.

Question 4 4. How should the issuance of the note be recorded in the company's accounting records?

Use this material to answer questions #4 through #5

Golden Horse Company issued a non-interest bearing note payable to its local credit union. The loan proceeds were $22,000 and the maturity value is $25,000.

Question 5 5. What should the journal entry look like at the time of repayment?

Page 2

Use this material to answer questions #6 through #8

Moonbucks Coffee Company borrows $125,000 from The Bank of Cash with an 8%, 12-month interest-bearing note.

Question 6 6. How much total interest will Moonbucks Coffee Company pay?

Use this material to answer questions #6 through #8

Moonbucks Coffee Company borrows $125,000 from The Bank of Cash with an 8%, 12-month interest-bearing note.

Question 7 7. At the time of borrowing, how should the journal entry for the interest-bearing note be recorded?

Use this material to answer questions #6 through #8

Moonbucks Coffee Company borrows $125,000 from The Bank of Cash with an 8%, 12-month interest-bearing note.

Question 8 8. What should the journal entry look like at time of repayment?

Question 9 9. How are interest-bearing and non-interest bearing notes different from each other?

Question 10 10. XYZ Corporation currently has an operating lease for some manufacturing equipment. What does that mean?

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Question 11 11. In terms of pensions, what does vesting refer to?

Question 12 12.

MicroHard Corporation purchased a new factory building on January 1. In the end-of-the-year balance sheet, MicroHard reported the mortgage on the building as $30,000 current liability and $350,000 long-term liability.


Which of the following is MOST accurate?

Question 13 13. A bond that has a present value that is less than its future value has been purchased at a _____.

Question 14 14. Which of the following bonds has been issued at a premium?

Question 15 15. Which of the following bonds has been issued at a discount?

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Question 16 16. Five years ago, CandleWood Corporation issued $100,000 bonds at an interest rate of 12%. If current interest rates have dropped to 4%, CandleWood Corporation is MOST likely to _____.

Question 17 17. An accounting journal entry that debits Bonds payable while crediting Cash is recording which of the following?

Question 18 18. Movie Media Corporation issued a 5-year, $15,000 bond with a coupon rate of 10%. The corporation then calls the bond early for $12,000. What is the gain on early retirement?

Question 19 19. A $250,000 bond is called early for cash of $280,000. Calculate the loss on early retirement.

Question 20 20. What is a serial bond?

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Question 21 21. What is a callable bond?

Question 22 22. A debenture can also be referred to as a(n) _____ bond.

Question 23 23. A bond that is payable to whoever holds it is referred to as a(n) _____ bond.

Question 24 24. What is an annuity?

Question 25 25. Bonds are generally reported on the _____ as a long-term liability at their present value.

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Question 26 26. What is the present value of a bond?

Question 27 27. How do you calculate the present value of a bond?

Question 28 28. Journal entries for _____ notes will feature a Discount on Note Payable line.

Question 29 29. Purple Rainbow Corporation borrowed $60,000 from The Bank of Cash with a non-interest bearing 9-month note. If the implied interest rate for the note is 4%, how much would Purple Rainbow Corporation receive as proceeds of the note?

Question 30 30. The Bank of Cash has agreed to loan $15,000 to XYZ Corporation. The implied interest rate is 10%. XYZ Corporation must pay back $16,245 in 10 months. What type of loan is this?

Accounting for Bonds & Notes Payable Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Accounting 202: Intermediate Accounting II  /  Business Courses
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