131. If a bond issuer's bond ratings drop, the company probably will have to pay higher interest rates on bonds that have already been issued.
132. Amortization of a discount on bonds payable is an asset use transaction.
133. Peak Enterprises issued bonds with a face value of $500,000, receiving cash of $508,000. To record this event, Bonds Payable should be credited for $500,000.
134. Park Enterprises issued bonds with a term of 5 years and a face value of $500,000, receiving cash of $508,000. The bonds pay interest once a year, with an annual rate of 7%. Assuming straight-line amortization, the amount of interest expense for the first year would be $31,600.
135. If the stated interest rate for bonds is the same as the effective interest rate, the bonds will be issued at their face value.
136. On January 1, 2016, Daniels Company issued bonds with a face value of $500,000, receiving $496,000 cash. These bonds were issued at a discount.
137. On January 1, 2016, Daniels Company issued bonds with a face value of $500,000, receiving $496,000 cash. When the bonds mature, Daniels will have to pay the face value of the bonds to the bondholders.
138. If a company has issued bonds at a premium, the amount of interest expense reported on the income statement each year will be greater than the amount of cash paid to bondholders for interest.
139. If bonds with a face value of $200,000 are issued at 98, the amount of cash received from issuing the bonds is $204,082.
140. If bonds are issued at a premium, the bond issuer will pay the bondholders an amount lower than the issue price at maturity.