Amortizing a bond discount:
A: Allocates a portion of the total discount to interest expense each interest period.
B: Increases the market value of the Bonds Payable.
C: Decreases the Bonds Payable account.
D: Decreases interest expense each period.
E: Increases cash flows from the bond.
A: Allocates a portion of the total discount to interest expense each interest period.
B: Increases the market value of the Bonds Payable.
C: Decreases the Bonds Payable account.
D: Decreases interest expense each period.
E: Increases cash flows from the bond.
举一反三
- When bond interest rates become less volatile, the demand for bonds _________ and the interest rate _________. A: increases; rises B: increases; falls C: decreases; falls D: decreases; rises
- As the coupon rate of a bond increases, the bond's:() A: face value increases B: current price decreases C: interest payments increase D: maturity date is extended
- A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is: A: $3,386.30. B: $3,500.00. C: $3,613,70. D: $6,633.70. E: $7,000.00.
- When you discount the future payments of a bond at a higher interest rate, you decrease the current value of the bond.
- Smith borrowed $21,000 on a one year Note payable with an interest rate of 10% per year on June 1. He will repay the principal and interest at the end of the one-year period. Smith makes accrual adjustments at the end of each month. He should record interest expense of $2,100 on June 30.