A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following? Select one: a. An overpayment for a bond purchase b. An underpayment for a bond purchase c. The current amount of amortization expense d. The unamortized amount of premium earned on a bond issue

A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following? Select one: a. An overpayment for a bond purchase b. An underpayment for a bond purchase c. The current amount of amortization expense d. The unamortized amount of premium earned on a bond issue

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 5MCQ: The premium on bonds payable account is shown on the balance sheet as A contra asset. A reduction of...

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Question

A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following?
Select one:
a. An overpayment for a bond purchase
b. An underpayment for a bond purchase
c. The current amount of amortization expense
d. The unamortized amount of premium earned on a bond issue

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The premium on bonds payable account is shown on the balance sheet as A contra asset. A reduction of an expense. An addition to a long-term liability. A subtraction from a long-term liability.
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The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable: Premium on Bonds Payable Deduct Add Deduct Add Discount on Bonds Payable Add Deduct Deduct Add
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The journal entry to record the issuance of bonds at a premium consists of a debit to Cash, a debit to Premium on Bonds Payable, and a credit to the Bonds Payable account. True or False True False