Quiz Ch 09 – T/F Bond-to-Stock Conversion Increases Corporation’s Equity
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
Converting bonds payable into common stock boosts the corporation’s equity.
Converting bonds payable into common stock boosts the corporation’s equity.
Assuming the bonds have a face value of $500,000 and a 6% annual interest rate with semi-annual payments, the interest payment on July 1 will be $15,000.
If bonds were issued at a discount, the carrying value of the bonds decreases over their term.
When the market interest rate is higher than the stated interest rate, the bonds will be sold at a discount.
The Premium on Bonds Payable account represents a liability for the issuer.
Which method of amortizing a bond discount or premium is considered the most theoretically correct?
What is the definition of secured bonds?
Given bonds payable, face amount, and market interest rate — prepare journal entries for (a) through (d).
Your numbers will vary.