Long Term Securities Paper 1

1

The best advantage of a zero-coupon bond to the issuer is that the






2

On January 1, Evangel Company issued 9% bonds in the face amount of $100,000, which Fact Pattern:sulting in a bond discount of $3,793. mature in 5 years. The bonds were issued for $96,207 to yield 10%, reEvangel uses the effective interest method of amortizing bond discount. Interest is payable annually on December 31.
What is the amount of interest Evangel will pay at the end of the first year?






3

A premium on bonds payable arises when






4

On January 1, Evangel Company issued 9% bonds in the face amount of $100,000, which mature in 5 years. The bonds were issued for $96,207 to yield 10%, resulting in a bond discount of $3,793. Evangel uses the effective interest method of amortizing bond discount. Interest is payable annually on December 31.
What is the amount of Evangel’s unamortized bond discount at the end of the first year?






5

On January 1, Evangel Company issued 9% bonds in the face amount of $100,000, which ct Pattern:Famature in 5 years. The bonds were issued for $96,207 to yield 10%, resulting in a bond discount of $3,793. zing bond discount. Interest is payable annually on Evangel uses the effective interest method of amortiDecember 31.
The net carrying amount of Evangel’s bonds payable at the end of the first year is






6

On January 1, Evangel Company issued 9% bonds in the face amount of $100,000, which ct Pattern:Famature in 5 years. The bonds were issued for $96,207 to yield 10%, resulting in a bond discount of $3,793. zing bond discount. Interest is payable annually on Evangel uses the effective interest method of amortiDecember 31.
What is the amount of interest expense that should be reported on Evangel’s income statement at the end of the first year?






7

On January 1, bonds with a face amount of $200,000, an 8% annual effective yield, and a 7% annual coupon rate were sold by Thomas Dynamics, Inc., for $180,000. The bonds pay interest on January 1 and July 1. Using the effective interest method, the company’s interest expense for the first 6 months ended July 1 will be






8

Debentures are






9

Which one of the following characteristics distinguishes income bonds from other bonds?






10

Serial bonds are attractive to investors because






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