21. Explain the special feature that makes callable bonds attractive to an issuing corporation.
22. Why would some bonds be classified as "secured bonds"? Provide an example of a common type of secured bond.
23. What is meant by the "spread" in banking? What does the "spread" have to do with the issuance of bonds?
24. When the stated interest rate of a bond is lower than the market interest rate, will the bond sell at a premium or at a discount?
25. What is the issue price of $200,000 in bonds that sell at 95.5?
26. When bonds are issued at a premium, which will be higher each year, the interest expense or the interest payment amount?
27. Describe the effect on the accounting equation of the issuance of $500,000, 8% ten-year bonds at 103 ½. Use numerical amounts in your answer.
28. If $200,000 of 12% bonds are issued at 101 ½, what amount of cash will be received by the corporation?
29. Which financial statements are affected by the entry to record the payment of bond interest and the related amortization of a discount? Describe how each statement is affected.
30. Alexander Corporation issued 20-year bonds payable at a discount in 2016. Will Alexander's net income for 2016 be higher, lower, or the same as it would have been had the bonds been issued at face value? Why?