WGU D104 TIME VALUE OF MONEY AND
FINANCIAL INSTRUMENTS REVIEW 2026
FINAL PAPER SOLUTION GUIDE
◉ Journal entry on retirement of bonds with a discount and loss
Answer: Debit bonds payable, debit loss on redemption of bonds,
credit discount on bonds payable, credit unamortized bond issue
costs, credit cash
◉ Journal entry to record a note for a loan with five even
installments
Answer: Debit cash, credit current maturities of long term debt (for
current year installment), credit long term debt (remaining
installment)
◉ How much should be recorded in the mortgages payable account
on closing with 4 points upon closing
Answer: Points reduce cash received, but do not affect the basis of
the mortgage liability.
◉ How much should be recorded in the cash account on closing with
4 points upon closing
Answer: Face value less the points percentage.
, ◉ Journal entry to record interest on a note
Answer: Debit interest expense, credit cash.
◉ Premium on bonds payable is what kind of liability
Answer: Long term liability
◉ Times interest earned ratio
Answer: (Net Income + Interest Expense + Income Tax Expense) /
Interest Expense
◉ Times interest earned ratio measures what
Answer: The ability of a company to pay its debt obligations. It
indicates the margin of safety provided to creditors.
◉ Debt to assets ratio
Answer: total liabilities / total assets
◉ Debt equity ratio
Answer: total liabilities/total equity
◉ The preemptive right enables a stockholder to
FINANCIAL INSTRUMENTS REVIEW 2026
FINAL PAPER SOLUTION GUIDE
◉ Journal entry on retirement of bonds with a discount and loss
Answer: Debit bonds payable, debit loss on redemption of bonds,
credit discount on bonds payable, credit unamortized bond issue
costs, credit cash
◉ Journal entry to record a note for a loan with five even
installments
Answer: Debit cash, credit current maturities of long term debt (for
current year installment), credit long term debt (remaining
installment)
◉ How much should be recorded in the mortgages payable account
on closing with 4 points upon closing
Answer: Points reduce cash received, but do not affect the basis of
the mortgage liability.
◉ How much should be recorded in the cash account on closing with
4 points upon closing
Answer: Face value less the points percentage.
, ◉ Journal entry to record interest on a note
Answer: Debit interest expense, credit cash.
◉ Premium on bonds payable is what kind of liability
Answer: Long term liability
◉ Times interest earned ratio
Answer: (Net Income + Interest Expense + Income Tax Expense) /
Interest Expense
◉ Times interest earned ratio measures what
Answer: The ability of a company to pay its debt obligations. It
indicates the margin of safety provided to creditors.
◉ Debt to assets ratio
Answer: total liabilities / total assets
◉ Debt equity ratio
Answer: total liabilities/total equity
◉ The preemptive right enables a stockholder to
