Exam 11: Reporting and Interpreting Stockholders Equity

You have been asked to compute the cash equivalent price of a machine assuming the cost (including principal and interest) is to be paid in two equal payments after the acquisition date. What is the interest concept that best describes this application?

Kristen deposits $5,000 in the bank at the end of each year for five years. How much money will she have in the bank at the end of five years, assuming she will be earning 6% interest annually on her deposits? (Round to the nearest dollar).

Typical non-current liabilities include lease obligations, asset retirement obligations, accrued retirement benefits liability, and deferred income taxes.

Bond discounts should be amortized to comply with the

Lamar Company authorized a $500,000, five-year, 12% bond issue dated October 1, 20A, with semi-annual interest to be paid each September 30 and March 31. On October 1, 20A, the bonds wer issued (sold) for $497,340. (a) Give the entry to record the sale of the bonds (b) It is December 31, 20A, the end of the accounting period. Give the required adjusting entry using straight-line amortization (c) Was the bond sold at par, at a discount or at a premium? (d) Will interest expense be greater than or less than the cash payments for interest?

At the beginning of Year 1, Mesa Corporation placed $10,000 in a savings account at 9%. A. Assuming no withdrawals, complete the following tabulation (round to the nearest dollar). B. Give the required journal entry at the end of Year 10 to record only the year 10 earnings:

On April 1, 20B, Larel Corporation issued $40,000, 9%, ten-year bonds payable at 108 that were dated April 1, 20B. Interest is payable each March 31 and September 30. (a) Give the entry to record the issuance of the bonds on April 1, 20B (b) Give the entry to record the first interest payment on September 30, 20B. Use straight-line amortization (c) Give the adjusting entry required on December 31, 20B, the end of the annual accounting period. Use straight-line amortization

When the bond liability reported on the statement of financial position increases each year, this indicates that the bond was:

In 2014, H Co had a debt to equity ratio of 2.86. It appears their business has a high ratio.

When a company prepares a bond indenture, certain provisions of the bonds are included. Which of the following are not provisions specified in the indenture?

Bonds held as investments should not be reported in the intangible assets section of the statement of financial position.

Which of the following is true?

Match the type of bond with the appropriate description. Type of Bond A. Debentures B. Secured bonds C. Ordinary bonds D. Serial bonds E. Callable bonds F. Redeemable bonds G. Convertible bonds H. Registered bonds I. Coupon bonds J. Indentures K. None of the above Description ____ 1. When the bond interest date approaches, the investor detaches a form from the bond, signs it, and mails it to the issuing company. ____ 2. Bonds that can be exchanged for other securities of the issuer, at the optio of the investor. 3. There is no pledge of assets, or mortgage, as a guarantee of payment of th bonds at maturity. 4. Bonds that may be called for early retirement at the option of the issuer. 5. The payment of the principal as a single sum at a specified date. ____ 6. Payment of bond interest is made only to the investor currently on the records of the issuer. ____ 7. Bonds that may be turned in for early retirement at the option of the investor. ____ 8. Bonds that include a mortgage or pledge of specific assets as a guarantee of repayment at maturity.

The carrying amount of a bond is equal to the maturity value on the date of maturity.

Which of the following statements pertaining to instalment notes with blended principal and interest payments is correct?

Kristen's grandmother promises to give her $1,000 at the end of each of the next five years. How much is the money worth today, assuming Kristen could invest the money and earn a 6% annual rate of return? (Round to the nearest dollar).

All long-term note payables are secured.

Calculation of the amount of the equal periodic payments that would be required at the end of each year to accumulate a $20,000 fund at the end of the tenth year is most readily determined by reference to a table that shows which of the following?

You have been asked to compute the amount of a fund that will be available at the end of three years as a result of a single sum of $1,000 that is deposited. What is the interest concept that best describes this application?

One thousand bonds with a face value of $1,000 each, are sold at 104. The entry to record the issue is