Reference no: EM131774350

Why would a corporation issue bonds payable instead of issuing stock?

A) Debt is a less expensive source of capital than stock.

B) Borrowing by issuing bonds payable carries no risk to the company.

C) Debt affects the percentage of ownership of the corporation by the stockholders.

D) Debt does not have to be shown on the balance sheet.

On June 1, 2017, Smith & Beecham Services issued $33,000 of 10% bonds that mature in five years. They were issued at par. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December 31, 2017, what is the total amount paid to bondholders?

A) $1,650

B) $3,300

C) $825

D) $1,100

On January 1, 2017, Carter Sales issued $38,000 in bonds for $16,700. These are six-year bonds with a stated interest rate of 11%, and pay semiannual interest. Carter Sales uses the straight-line method to amortize the Bond Discount. What amount is debited to Interest Expense on June 30, 2017? 

A) $2,090
B) $3,865
C) $1,775
D) $43,297

On January 1, 2017, Walker Sales issued $30,000 in bonds for $23,300. These are eight-year bonds with a stated rate of 11%, and pay semiannual interest. Walker Sales uses the straight-line method to amortize the bond discount. After the second interest payment on December 31, 2017, what is the bond carrying amount? (Round your intermediate answers to the nearest cent, and your final answer to the nearest dollar.)

A) $24,138
B) $23,719
C) $30,000
D) $23,300

On July 1, 2017, Miniature Company has bonds with balances as shown below.

Bonds Payable
CREDIT 70,000

Discount on Bonds Payable
DEBIT 3,600

If the company retires the bonds for $71,150, what will be the effect on the income statement?
A) loss on retirement of $4,750
B) gain on retirement of $4,750
C) sales revenue of $66,400
D) no effect on net income