Exam 10: Reporting and Analyzing Liabilities

Discount on Bonds Payable is ________________ ("deducted from" or "added to") bonds payable on the balance sheet. Premium on Bonds Payable is ________________ ("deducted from" or "added to") bonds payable on the balance sheet.

Steiner Sales Company has the following selected accounts after posting adjusting entries: Accounts Payable \ 65,000 Notes Payable, 3-month 50,000 Accumulated Depreciation-Equipment 14,000 Notes Payable, 5-year, 6\% 80,000 Payroll Tax Expense 4,000 Interest Payable 3,000 Mortgage Payable 120,000 Sales Taxes Payable 38,000 Instructions Prepare the current liability section of Steiner Sales Company's balance sheet, assuming $15,000 of the mortgage is payable next year.

The following totals for the month of March were taken from the payroll records of Kern Company. Salaries $54,000 FICA taxes withheld 4,131 Income taxes withheld 11,880 Medical insurance deductions 783 Federal unemployment taxes 432 State unemployment taxes 2,700 The entry to record accrual of employer's payroll taxes would include a

On April 1, Holton Company borrows $100,000 from West Bank by signing a 6-month, 6%, interest-bearing note. Instructions Prepare the necessary entries below associated with the note payable on the books of Holton Company. (a) Prepare the entry on April 1 when the note was issued. (b) Prepare any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other interest accrual entries have been made.

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

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

The current portion of long-term debt should

On January 1, 2014, $2,000,000, 10-year, 10% bonds, were issued for $1,940,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is

On January 1, 2014, Hauke Corporation issued $900,000, 6%, 10-year bonds at face value. Interest is payable annually on January 1. Hauke Corporation has a calendar year end. Instructions Prepare all entries related to the bond issue for 2014.

The current market value of a bond is equal to the present value of all future cash payments promised by the bond.

Liquidity ratios measure a company's

If the market rate of interest is lower than the contractual interest rate, the bonds will sell at

Unsecured bonds that are issued against the general credit of the borrower are called ________________ bonds.

Interest expense on a note payable is only recorded at maturity.

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 classification of a liability as current or noncurrent is important because it may affect the evaluation of a company's liquidity.

Sielert Corporation borrowed $900,000 from National Bank on May 31, 2013. The three-year, 7% note required annual payments of $342,945 beginning May 31, 2014. The total amount of interest to be paid over the life of the loan is

The following partial amortization schedule is available for Courtney Company who sold $500,000, five-year, 10% bonds on January 1, 2014 for $520,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (v)?

The present value of a $10,000, 5-year bond, will be less than $10,000 if the

Liabilities are classified as current or long-term based on their