Exam 9: Current Liabilities, Contingencies, and the Time Value of Money

Marsh Corporation borrowed $90,000 by issuing a 12%, six-month note payable, all due at the maturity date.After one month, the company's total liability for this loan amounts to:

In 2015, Baloga Heating Company sold 400 water heaters for $350 each.The water heaters carry a 2-year warranty for repairs.Baloga estimates that repair costs will average 2% of the total selling price.How much is recorded in the warranty liability account as a result of selling the water heaters during 2015?

If a 12% interest rate is compounded quarterly for 3 years, then there would be __________________________ compounding periods.

If current assets amount to $62,000, total assets $350,000, current liabilities $31,000, and total liabilities $125,000, then the current ratio is

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays March 12, then the amount paid to the seller would be

Simple interest on a loan can be calculated by multiplying the principal by the annual interest rate expressed as a percentage of the time in years or a fraction of the time in years.

Interest payable on a loan becomes a liability:

Proctor Inc.has a weekly payroll of $8,000 for a 5-day workweek, Monday through Friday.If December 31, the last day of the accounting year, falls on Wednesday, Proctor would make an adjusting entry that would

International accounting standards use the term provision for those contingent items that must be recorded on the balance sheet.

A current ratio of or better is usually considered a comfortable margin.

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Barton Company has just purchased a machine with a cost of $100,000, and signed a note agreeing to pay the manufacturer equal annual amounts of $17,400.If the current rate of interest is 8%, how many equal annual payments will be made?

For a given contingent liability, the company has the choice of either recording it on the balance sheet or disclosing it in the notes.

The terms referring to contingencies differ between U.S.GAAP and IFRS.

The current maturity of long-term debt is a current liability.

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. A company will have to pay a $50,000 liability in 4 years.How much must be deposited now into a bank account earning 8% compounded semiannually to fully fund the future payment?

Which of the following is not classified as a noncurrent liability?

Discount on Notes Payable is treated as a reduction of notes payable on the balance sheet.

Income taxes payable is a current liability.

In a compound interest problem, if you know the future value, the present value, and the number of periods, then you can solve for the interest rate.

When a company uses coupon or premium offers in conjunction with the sale of its products, there is no need to record any contingent liability.