Samson Enterprises issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. The entry to record the bond issuance would have what effect on the financial statements?
A) Increase assets.
B) Increase liabilities.
C) Increase stockholders' equity.
D) Increase assets and liabilities.
Answer: D
A bond issued at a premium indicates that at the date of issue:
A) Its stated rate was lower than the prevailing market rate of interest on similar bonds.
B) Its stated rate was higher than the prevailing market rate of interest on similar bonds.
C) The bonds were issued at a price less than their face value.
D) The bonds must be non-interest bearing.
Answer: B
A bond issued at a discount indicates that at the date of issue:
A) Its stated rate was lower than the prevailing market rate of interest on similar bonds.
B) Its stated rate was higher than the prevailing market rate of interest on similar bonds.
C) The bonds were issued at a price greater than their face value.
D) The bonds must be non-interest bearing.
Answer: A
