Prin II Bonds Payable Review

Transylvania University issues a $100 bond at 8% interest, payable quarterly. How much does Transylvania pay in interest on the first payment?

• $0

• $2

• $8

• $32

If a bond has a coupon rate of 5% while the market rate is 7%, the bond will sell

• at a premium

• at face value

• at a discount

• at the amortized price

A $100 bond sells at 103. What is the sales price of the bond?

• $10.30

• $203

• $103

• $97

A 10-year bond pays interest semi-annually. Over how many periods will the discount be amortized?

• Not enough information

• 20

• 10

• 5

A $1,000 bond is issued at a sales price of $1,200. Which of the following is part of the journal entry to record the issuance?

• Debit Cash $1,000

• Credit Premium $200

• Credit Bonds Payable $1,200

• Debit Discount $200