Reference no: EM132597335

Question 1) One potential advantage of financing corporations through the use of bonds rather than common stock is

a. a higher earnings per share is guaranteed for existing common shareholders

b. the corporation must pay the bonds at maturity

c. the interest on bonds must be paid when due

d. the interest expense is deductible for tax purposes by the corporation

Question 2) The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to

a. debit Cash, credit Bonds Payable

b. debit Cash, credit Premium on Bonds Payable and Bonds Payable

c. debit Cash and Discount on Bonds Payable, credit Bonds Payable

d. debit Bonds Payable, credit Cash