Exam 10: Reporting and Analyzing Liabilities

Hogan Company has $2,000,000 of bonds outstanding.The unamortized premium is $28,800.If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

In the balance sheet, the account Premium on Bonds Payable is

The board of directors may authorize more bonds than are issued.

Two sisters operate a bed and breakfast on the coast of Maine.As customers make reservations they are required to pay cash in advance equal to one-half of the rate for their stay.How should the sisters account for the cash received as reservations are made?

During the month, a company sells goods for a total of $106,000, which includes sales taxes of $6,000; therefore, the company should recognize $100,000 in Sales Revenue and $6,000 in Sales Tax Expense.

If $180,000, 6%, bonds are issued on January 1 and pay interest annually, the amount of interest paid will be $10,800.

A $1,000,000 bond was retired at 98 when the carrying value of the bond was $985,000.The entry to record the retirement would include a

All of the following are true regarding financial statement analysis ratios associated with liabilities except

The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the

Morales Company issued $800,000 of 8%, 5-year bonds at 106, which pay interest annually.Assuming straight-line amortization, what is the carrying value of the bonds after one year?

A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market rate of interest.

Each bondholder may vote for the board of directors in proportion to the number of bonds held.

An unsecured bond is one that is issued against the general credit of the borrower.

Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer.

The following totals for the month of April were taken from the payroll records of Noll Company. The entry to record the accrual of federal unemployment tax would include a

Sparks Company received proceeds of $634,500 on 10-year, 8% bonds issued on January 1, 2019.The bonds had a face value of $600,000, pay interest annually on December 31, and have a call price of 102.Sparks uses the straight-line method of amortization.What is the carrying value of the bonds on January 1, 2021?

Sparks Company received proceeds of $634,500 on 10-year, 8% bonds issued on January 1, 2019.The bonds had a face value of $600,000, pay interest annually on December 31, and have a call price of 102.Sparks uses the straight-line method of amortization.What is the amount of interest expense Sparks will show with relation to these bonds for the year ended December 31, 2020?

If a bond has a stated value of $1,000 and a contractual interest rate of 6 percent, then the interest paid annually will be $60.

When the straight-line method of amortization is used for a bond premium, the amount of interest expense for an interest period is calculated by

The amortization of a bond premium will result in reporting an amount of interest expense for an interest period that