-./Your answer is correct. • Reed aboUt lhls
The bond's _ _ _ rate of interest is the rate that borrowers are willing to pay and lenders are willing
to accept for a particular bond and its risk level.
-./ Your answer is correct.
par
contract
coupon
I f ! market
?
Reed aboUt lhls
Market rates help determine the selling price of bonds. Identify which scenarios should be matched
together.
?
~ Your answer is correct
You matched:
Reed about t111s
The correct match:
~
Premium
c-::i
Contract rate is greater than the market rate
~
Discount
c-::i
Contract rate is less than the market rate
~
Par
c-::i
Contract rate is equal to market rate
J
J
l
A company issues $100,000 of 6%, 10-year bonds dated January 1, 2010, that pay interest
semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer
records the first semi-annual interest payment with which of the following entries? (Check all that
apply.)
~ Your answer is correct.
Debit to Interest Expense for $6,000.
Credit to Cash for $6,000.
f
i
?1
Debit to Interest Expense for $3,000.
Credit to Cash for $3,000.
?
Read about lhls
The correct answer is shown.
Lyle Co. borrowed $20,000 from First Bank by signing a written promise to pay a definite sum of
money on a specific future date. Lyle will record this in the general ledger as a(n) notes payable.
V' Your answer is correct
?
Reed about 11119
The bond contract rate determines the annual interest paid by multiplying the bond ___ value by
the contract rate.
../ Your answer is correct.
market
premium
?
Read about lhis
................
................
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