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The Journal Entry to Record the Sale of Bonds at Their

Question 49
Multiple Choice

The journal entry to record the sale of bonds at their par value results in which of the following? A)An increase in assets and liabilities equal to the par value of the bonds. B)An increase in assets and liabilities equal to the par value of the bonds and their associated interest payments. C)An increase in assets equal to the par value of the bonds and an increase in liabilities equal to the bonds' future cash flows. D)An increase in assets and liabilities equal to the bonds' future cash flows.

Related questions
Q 50
Assuming no adjusting journal entries have been made,the journal entry to record the cash interest payment on the due date for bonds issued at their par value results in which of the following? A)An increase in expenses and a decrease in liabilities. B)An increase in expenses and a decrease in assets. C)A decrease in both liabilities and stockholders' equity. D)A decrease in both assets and liabilities.
Q 51
Which of the following statements correctly describes the accounting for bonds that were issued at a discount? A)The market rate of interest is less than the coupon interest rate. B)The interest expense over the life of the bonds will be less than the total cash interest payments. C)The present value of the bonds' future cash flows is greater than the bonds' maturity value. D)The book value of the bond liability increases when interest payments are made on the due dates.
Q 52
Which of the following statements does not correctly describe the accounting for bonds that were issued at a discount? A)The interest expense over the life of the bond exceeds the total cash interest payments. B)The interest expense over the life of the bonds increases as the bonds mature when the effective interest method is used. C)The amortization of the discount on bonds payable account decreases as the bonds mature when the effective interest method is used. D)The book value of the bond liability increases when interest payments are made on the due dates when the effective interest method of amortization is used.
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