Quiz Review Week 6

Week 6 Quiz Review – Chapter 14 Here are the topics covered on the quiz. You should know the following: 1. Reporting Bonds Payable on the balance sheet, including how unamortized discount on bonds payable is treated. In other words how do we show face value and how/where do we show either discount or premium 2. Comparing two bond issues as to whether one will sell for the same, more or less than the other, knowing their coupon rates and the market rate 3. Definition of “effective rate” of interest on a Bond Payable 4. Straight line method of amortizing premium or discount, and how it affects calculation of reported interest expense 5. Using effective interest method, computing amount of interest income to be reported by a bondholder if know what they paid for the bonds, face value, plus current as well as contract rates of interest. (Be prepared to compute for both year of purchase as well as the following year) 6. Compute amount received by a corporation for bonds issued at face value, but between interest dates 7. Accounting for cash proceeds from a bond issue when bonds include detachable warrants 8. Determine amount considered as paid for equipment if it is paid for by issuance of a long-term note