FIN MANAG. ACCT. (LL) W/CONNECT (1TERM)
9th Edition
ISBN: 9781266573859
Author: Wild
Publisher: MCG
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Chapter 10, Problem 17QS
To determine
Introduction: A corporate or governmental body may issue bonds to investors as a fixed obligation to pay. Bonds are a way to raise money for infrastructural or operational projects. Bonds are typically repaid as of the bond's maturity date and typically contain a periodic coupon payment.
To Match: The bonds features with the terminology.
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Select the description that best fits each term or phrase. A. Records and tracks the bondholders’ names. B. Is unsecured; backed only by the issuer’s credit standing. C. Has varying maturity dates for amounts owed. D. The legal contract between the issuer and the bondholders. E. Can be exchanged for shares of the issuer’s stock. F. Is unregistered; interest is paid to whoever possesses them. G. Maintains a separate asset account from which bondholders are paid at maturity. H. Pledges specific assets of the issuer as collateral. 1. Registered bond 5. Convertible bond 2. Serial bond 6. Bond indenture 3. Secured bond 7. Sinking fund bond 4. Bearer bond 8. Debenture
Bonds which are collateralized by specific assets in the event the borrowing
company defaults on bond payments are called:
Select one:
a. serial bonds.
b. callable bonds.
c. unsecured bonds.
d. secured bonds.
e. convertible bonds.
To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential.
For example:
•
A bond’s refers to the interest payment or payments paid by a bond.
•
A bond issuer is said to be in if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants.
•
The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called .
•
A bond’s gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions.
Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information:
Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00
What is the issuing date of this bond?
7-15-2005
7-15-2055…
Chapter 10 Solutions
FIN MANAG. ACCT. (LL) W/CONNECT (1TERM)
Ch. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QS
Ch. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 16QSCh. 10 - Prob. 17QSCh. 10 - Prob. 18QSCh. 10 - Prob. 19QSCh. 10 - Prob. 20QSCh. 10 - Prob. 21QSCh. 10 - Prob. 22QSCh. 10 - Prob. 23QSCh. 10 - Prob. 24QSCh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Prob. 10ECh. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Prob. 21ECh. 10 - Prob. 22ECh. 10 - Prob. 23ECh. 10 - Prob. 1PSACh. 10 - Prob. 2PSACh. 10 - Prob. 3PSACh. 10 - Prob. 4PSACh. 10 - Prob. 5PSACh. 10 - Prob. 6PSACh. 10 - Prob. 7PSACh. 10 - Prob. 8PSACh. 10 - Prob. 9PSACh. 10 - Prob. 10PSACh. 10 - Prob. 11PSACh. 10 - Prob. 12PSACh. 10 - Prob. 13PSACh. 10 - Prob. 1PSBCh. 10 - Prob. 2PSBCh. 10 - Prob. 3PSBCh. 10 - Prob. 4PSBCh. 10 - Prob. 5PSBCh. 10 - Prob. 6PSBCh. 10 - Prob. 7PSBCh. 10 - Prob. 8PSBCh. 10 - Prob. 9PSBCh. 10 - Prob. 10PSBCh. 10 - Problem 10-10BB Effective Interest: Amortization...Ch. 10 - Prob. 12PSBCh. 10 - Prob. 13PSBCh. 10 - Prob. 10SPCh. 10 - Prob. 1.1AACh. 10 - Prob. 1.2AACh. 10 - Prob. 1.3AACh. 10 - Prob. 2.1AACh. 10 - Prob. 2.2AACh. 10 - Prob. 2.3AACh. 10 - Prob. 3.1AACh. 10 - Prob. 3.2AACh. 10 - Prob. 3.3AACh. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - What is the issue price of a $2,000 bond sold at...Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTN
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- Bearer bonds are bonds A-with coupons attached that are redeemable by whoever has the bond B-where the registered owner automatically receives bond payments when scheduled C-in which the issue matures on a series of dates. D-issued in another currency other than the bond issuer's home currency.arrow_forwardListed below are terms and definitions assoclated with bonds. Select the bond term that matches with the definitlon. Definitions Terms Allows the issuer to pay off the bonds early at a fixed price. Matures in installments. Secured only by the "full faith and credit" of the issuing corporation. Allows the investor to transfer each bond into shares of common stock. Money set aside to pay debts as they come due. a. b. C. d. е. f. Matures on a single date. 9. Supported by specific assets pledged as collateral by the issuer. h. Includes underwriting, legal, accounting, registration, and printing fees.arrow_forwardWhen the initial present value of a bond payable is higher than its face amount, an entity would usually ________ the _______________________ account when recording amortization of interests. debit; Premium on Note Receivable credit; Premium on Note Receivable debit; Interest Expense credit; Interest Expensearrow_forward
- More on types of bonds You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Description Type of Bond These bonds are collateralized securities with first claims in the event of bankruptcy. Senior mortgage bonds,subordinate debentures, Junior Mortgage Bonds These bonds are not backed by any physical collateral. They are backed by the reputation and creditworthiness of the issuing company. Same as the above answer choices These bonds are considered the riskiest of all corporate bonds and thus offer the highest interest rates. Same as the above answer choices Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? An indenture is a legal document that details the rights of bondholders. If the indenture includes a sinking funds provision, the bond…arrow_forwardThe agreements and other terms of the contract between the issuer of the bonds and the one that lends the funds are established in: The surety contracts (bond indenture). Bond obligations (bond debenture). Registered bonds. Voucher coupon.arrow_forwardWhat is the journal entry to record the bond interest payment if you do not have to neither a premium or discount is involved? O Debit Interest Expense; Credit Cash O Debit Cash; Credit Interest Payable O Credit Cash; Debit Interest Expense O Debit Interest Payable; Credit Interest Expensearrow_forward
- 2. Characteristics of bonds A. To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond’s is generally $1,000 and represents the amount borrowed from the bond’s first purchaser. • A bond issuer is said to be in if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants. • The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called . • A bond’s gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information: Bridge Bonds Series A Dated 7-15-2005 4.375%…arrow_forwardPresented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. Amortized cost Fair value (a) Indicate whether the bonds were purchased at a discount or at a premium. (b) (c) No. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (b) C 12/31/25 12/31/26 12/31/27 $489,700 $546,800 $501,000 496,100 535,800 501,000 Prepare the adjusting entry to record the bonds at fair value at December 31, 2025. The Fair Value Adjustment account has a debit balance of $1,100 prior to adjustment. Prepare the adjusting entry to record the bonds at fair value at December 31, 2026. Date eTextbook and Media List of Accounts Account Titles and Explanation Debit Credarrow_forwardThe journal entry to record the issuance of bonds at a premium consists of a debit to Cash, a debit to Premium on Bonds Payable, and a credit to the Bonds Payable account. True or False True Falsearrow_forward
- A debenture is ________. A. the interest paid on a bond B. a type of bond that can be sold back to the issuing company whenever the bondholder wishes C. a bond with only the companys word that they will pay it back D. a bond with assets such as land to back their word that they will pay it backarrow_forwardFor each of the following items, specify whether the information would most likely be found on the balance sheet, the income statement, the statement of cash flows, or in the notes to the statements.arrow_forwardHow are the bonds issued, what is the appropriate journal entry? Provide example for issuing bonds. How do we determine the present value of a bond when market rate differs from its contract rate? How do we record the interest payment (provide examples for both premium and discount amortization), using the effective interest method? What is the difference between the effective interest method and the straight line method when amortizing either a discount or a premium? Cite and give credit to the author that you are citing.arrow_forward
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