• Home
  • Textbooks
  • Principles of Accounting Volume 1: Financial Accounting
  • Long-Term Liabilities

Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Chapter 13

Long-Term Liabilities - all with Video Answers

Educators

Section 1

Explain the Pricing of Long-Term Liabilities

00:56

Problem 1

An amortization table ________.
A. breaks each payment into the amount that goes toward interest and the amount that goes toward the principal
B. is a special table used in a break room to make people feel equitable
C. separates time value of money tables into present value and future value
D. separates time value of money tables into single amounts and streams of cash

Charles Carter
Charles Carter
Numerade Educator
02:26

Problem 2

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 company’s word that they will pay it back
D. a bond with assets such as land to back their word that they will pay it back

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
00:55

Problem 3

The principal of a bond is ________.
A. the person who sold the bond for the company
B. the person who bought the bond
C. the interest rate printed on the front of the bond
D. the face amount of the bond that will be paid back at maturity

Matt Just
Matt Just
Numerade Educator
00:48

Problem 4

A convertible bond can be converted into ________.
A. preferred stock
B. common stock and then converted into preferred stock
C. common stock of a different company
D. common stock of the company

Zach Steedman
Zach Steedman
Numerade Educator
01:45

Problem 5

On January 1, a company issued a 5-year $\$100,000$ bond at 6%. Interest payments on the bond of
$\$6,000$ are to be made annually. If the company received proceeds of $112,300, how would the bond’s issuance be quoted?
A. 1.123
B. 112.30
C. 0.890
D. 89.05

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:45

Problem 6

On July 1, a company sells 8-year $\$250,000$ bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________.
A. $\$ 120,000$
B. $\$ 60,000$
C. $\$ 7,500$
D. $\$ 15,000$

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:45

Problem 7

On January 1 a company issues a $\$75,000$ bond that pays interest semi-annually. The first interest payment of $\$1,875$ is paid on July 1. What is the stated annual interest rate on the bond?
A. 5.00%
B. 2.50%
C. 1.25%
D. 10.00%

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:45

Problem 8

On October 1 a company sells a 3-year, $\$2,500,000$ bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________.
A. $\$ 200,000$
B. $\$ 558,438$
C. $\$ 2,233,750$
D. $\$ 6,701,250$

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:45

Problem 9

On April 1 a company sells a 5-year, $\$60,000$ bond with a 7% stated interest rate. The market interest on that day was also 7%. If interest is paid quarterly, the company makes interest payments of ________.
A. $\$ 1,050$
B. $\$ 3,150$
C. $\$ 4,200$
D. $\$ 5,250$

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator