Exam 10: Reporting and Analyzing Liabilities

Thayer Company purchased a building on January 2 by signing a long-term $2,520,000 mortgage with monthly payments of $23,100. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

On January 1, 2014, Ermler Company, a calendar-year company, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2014, is

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.

The interest charged on a $250,000 note payable, at the rate of 6%, on a 60-day note would be

During the month of March, Preston Company's employees earned wages of $90,000. Withholdings related to these wages were $6,885 for Social Security (FICA), $14,200 for federal income tax, $6,200 for state income tax, and $600 for union dues. The company incurred no cost related to these earnings for federal unemployment tax, but incurred $1,300, for state unemployment tax. Instructions (a) Prepare the necessary March 31 journal entry to record wages expense and wages payable. Assume that wages earned during March will be paid during April. (b) Prepare the entry to record the company's payroll tax expense.

Bonds with a face value of $400,000 and a quoted price of 98½ have a selling price of

Oliver Company issued $800,000 of 6%, 5-year bonds at 98. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

Sales taxes collected by a retailer are recorded by

When a bond sells at a discount, what is probably true about the market interest rate versus the stated interest rate? Discuss.

The interest charged on a $250,000 note payable, at the rate of 6%, for a year would be

A cash register tape shows cash sales of $2,500 and sales taxes of $200. The journal entry to record this information is

On October 1, Sam's Painting Service borrows $100,000 from National Bank on a 3-month, $100,000, 4% note. The entry by Sam's Painting Service to record payment of the note and accrued interest on January 1 is

A method of amortizing bond discount or premium that allocates an equal amount each period is the ________________ method.

On January 1, 2014, Michelin Company, a calendar-year company, is issued €9,000,000 of mortgage notes payable, of which €3,000,000 is due on January 1 for each of the next three years. The proper statement of financial position presentation on December 31, 2014, is

The adjusted trial balance for Helton Corporation at the end of 2014 contained the following accounts: Instructions (a) Prepare the long-term liabilities section of the balance sheet. (b) Indicate the proper balance sheet classification for the accounts listed above that do not belong in the long-term liabilities section.

Collins Company borrowed $750,000 from BankTwo on January 1, 2013 in order to expand its mining capabilities. The five-year note required annual payments of $195,327 and carried an annual interest rate of 9.5%. What is the balance in the notes payable account at December 31, 2014?

Sales taxes collected by a retailer from a customer are expenses

Bonds that are secured by real estate are termed

(a)In general, what are the requirements for the financial statement presentation of long-term liabilities? (b) What ratios may be computed to evaluate a company's liquidity and solvency?

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 (iv)?