12[1] - 1 ,bondswillsell StudentResponse 1 atfacevalue 2...

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1.   If the market rate of interest is greater than the contractual rate of interest, bonds will sell   Student Response Value Correct Answer Feedback 1.  at face value.      2. only after the stated  rate of interest is  increased.      3. at a premium.      4. at a discount. 100%       Score: 1/1    2.   Bonds may be purchased directly from the issuing corporation or through one of the bond exchanges.    Score: 1/1    3.   The journal entry a company records for the payment of interest, interest expense, and amortization of bond  discount is   
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  Score: 0/1    4.   The effective interest method produces a constant dollar amount of interest expense to be reported each  interest period.    Score: 0/1    5.   The interest rate specified in the bond indenture is called the    Score: 1/1   
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6.   On January 1, 2007, the Horton Corporation issued 10% bonds with a face value of $200,000.  The bonds are  sold for $196,000.  The bonds pay interest semiannually on June 30 and December 31 and the maturity date is  December 31, 2011.  Horton records straight-line amortization of the bond discount.  The bond interest expense  for the year ended December 31, 2007, is    Score: 0/1    7.   When the effective-interest method is used, the amortization of the bond premium    Score: 0/1    8.  
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The carrying amount of the bonds is defined as the face value of the bonds plus any unamortized discount or  less any unamortized premium.    Score: 1/1    9.   A corporation issues for cash $2,000,000 of 8%, 15-year bonds, interest payable annually, at a time when the  market rate of interest is 7%.  The straight-line method is adopted for the amortization of bond discount or  premium.  Which of the following statements is true?    Score: 0/1    10.   If the straight-line method of amortization of discount on bonds payable is used, the amount of yearly interest  expense will increase as the bonds approach maturity.   
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Score: 0/1    11.   The balance in Premium on Bonds Payable    Score: 1/1    12.   If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually with a face value of  $100,000 will be    Score: 1/1    13.
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  Bondholders claims on the assets of the corporation rank ahead of stockholders.    Score: 1/1    14.   On January 1, 2010, Zero Company obtained a $52,000, four-year, 6.5% installment note from Regional Bank.  The note requires annual payments consisting of principal and interest of $15,179, beginning on December 31,  2010. The December 31, 2010 carrying amount in the amortization table for this installment note will be equal  to:    Score: 0/1    15.
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