Exam 10: Reporting and Analyzing Liabilities

The current carrying value of Pierce's $1,800,000 face value bonds is $1,793,200.If the bonds are retired at 102, what would be the amount Pierce would pay its bondholders?

An $800,000 bond was retired at 98 when the carrying value of the bond was $824,000.The entry to record the retirement would include a

The higher the sales tax rate, the more profit a retailer can earn.

A corporation issues $300,000, 10%, 5-year bonds on January 1, 2020, for $287,400.Interest is paid annually on January 1.If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2020's adjusting entry is

If $150,000 face value bonds are issued at 102, the proceeds received will be $102,000.

With an interest-bearing note, the amount of assets received upon issuance of the note is generally

Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1.Sadowski Brick Company signs a $500,000, 6%, 9-month note.What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30?

Bonds that may be exchanged for common stock at the option of the bondholders are called

Which of the following statements best describes the behavior over time of the components of equal mortgage payments?

If bonds have been issued at a discount, then over the life of the bonds the

Bonds with a face value of $500,000 and a quoted price of 102¼ have a selling price of

Current maturities of long-term debt refer to the amount of interest on a note payable that must be paid in the current year.

Which of the following most likely would be classified as a current liability?

Discount on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the effective-interest method.

The following partial amortization schedule is available for Courtney Company who sold $750,000, five-year, 10% bonds on January 1, 2020, for $780,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (v)?

The times interest earned is computed by dividing net income by interest expense.

West County Bank agrees to lend Drake Builders Company $400,000 on January 1.Drake Builders Company signs a $400,000, 6%, 6-month note.What entry will Drake Builders Company make to pay off the note and interest at maturity assuming that interest has been accrued to June 30?

When there are material differences between the results of using the straight-line method and using the effective-interest method of amortization, the effective-interest method should be used.

Julie Lambert has a large consulting practice.New clients are required to pay one-half of the consulting fees up front.The balance is paid at the conclusion of the consultation.How does Lambert account for the cash received at the end of the engagement?

Restoration Company issued bonds that had the following data associated with them: Interest to be paid is $40,000. Interest expense to be recorded is $45,000. Which of the following characteristics is true?