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    Sinking Fund and Bond Questions

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    Can you please provide the answer along with the explanition and/or calculations?

    6. Sinking fund cash would be classified on the balance sheet at:
    current asset
    fixed asset
    intangible asset
    investment

    13. Sinking fund cash would be classified as a current asset?
    True or False

    14. A corp issued $100,000, 13%, 10 year bonds that pay interest semiannually. The market quote on the bonds was 94.8. How much cash was received when the bonds were sold?
    94800
    100000
    70500
    105400

    15. Sinking fund income is reported in the income statement as
    income from operations
    extraordinary income
    gain on sinking fund transactions
    other income

    20. Sinking fund investments would be classified on the balance sheet as
    current asset
    fixed asset
    investment
    intangile asset

    21. Bonds payable has a balance of $900,000 and discount on bonds has a balance of $10,000. If the issuing corp redems the bonds at 98, what is the amount of gain or loss on redemption?
    8000 gain
    8000 loss
    10000 loss
    10000 gain

    23. The interest rate specified in the bond indenture is called
    discount rate
    contract rate
    market rate
    effective rate

    24. If $4,000,000 of 12% bonds are issued at 101, the amount of cash received from the sale is
    4040000
    4000000
    4080000
    3960000

    26. The special fund set aside to provide for the payment of bonds at maturity is called the sinking fund?
    True or False

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    Solution Preview

    6. Investment: Even if bonds mature in the current year, and even if the sinking fund consists strictly of cash, the sinking fund is considered to be an investment, not a current asset.

    13. False: Based upon the response to #6, the answer to this question is false.

    14. $94,800: The market for bonds is quoted as a percentage of par value. In this case, the company is selling bonds with a par value of $100,000 for 94.8 percent of that value. Thus, ...

    Solution Summary

    6. Sinking fund cash would be classified on the balance sheet at:
    current asset
    fixed asset
    intangible asset
    investment

    13. Sinking fund cash would be classified as a current asset?
    True or False

    14. A corp issued $100,000, 13%, 10 year bonds that pay interest semiannually. The market quote on the bonds was 94.8. How much cash was received when the bonds were sold?
    94800
    100000
    70500
    105400

    15. Sinking fund income is reported in the income statement as
    income from operations
    extraordinary income
    gain on sinking fund transactions
    other income

    20. Sinking fund investments would be classified on the balance sheet as
    current asset
    fixed asset
    investment
    intangible asset

    21. Bonds payable has a balance of $900,000 and discount on bonds has a balance of $10,000. If the issuing corp. redeems the bonds at 98, what is the amount of gain or loss on redemption?
    8000 gain
    8000 loss
    10000 loss
    10000 gain

    23. The interest rate specified in the bond indenture is called
    discount rate
    contract rate
    market rate
    effective rate

    24. If $4,000,000 of 12% bonds are issued at 101, the amount of cash received from the sale is
    4040000
    4000000
    4080000
    3960000

    26. The special fund set aside to provide for the payment of bonds at maturity is called the sinking fund?
    True or False

    $2.19

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