Essay About Long-Term Financing And Bonds

Acc 291 Week 3
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E10-6
Debit
Credit
Payroll Tax Expense
$ 352.16
FICA Taxes Payable
$ 198.40
Federal Unemployment Taxes Payable
$ 19.84
State Unemployment Taxes Payable
$ 133.92
(To record employers weekly payroll taxes)
E10-8
Jim Thome has prepared the following list of statements about bonds.
1. Bonds are a form of interest-bearing notes payable.–True
2. When seeking long-term financing, an advantage of issuing bonds over issuing common
stock is that stockholder control is not affected.–True
3. When seeking long-term financing, an advantage of issuing common stock over issuing
bonds is that tax savings result.–False “When seeking long-term financing, an advantage
of issuing bonds over issuing common stock is that tax saving result.”
4. Secured bonds have specific assets of the issuer pledged as collateral for the bonds.–True
5. Secured bonds are also known as debenture bonds.–False “Unsecure bonds are also known
as debenture bonds.”
6. Bonds that mature in installments are called term bonds.–False “Bonds that mature in
installments are called serial bonds”
7. A conversion feature may be added to bonds to make them more attractive to bond buyers.–True
8. The rate used to determine the amount of cash interest the borrower pays is called the stated rate.–True
9. Bond prices are usually quoted as a percentage of the face value of the bond.–True
10. The present value of a bond is the value at which it should sell in the marketplace.–True
E10-18
Debit
Credit
Jan 1
$ 562,613
Discount on Bonds Payable
$ 37,387
Bonds Payable
$ 600,000
(To record the issue of bonds at discount)
Debit
Credit
July 1
Bond Interest Expense
$ 28,131
Discount Bonds Payable
$ 1,131
$ 27,000
(To record payment of interest and discount amortization)