Exam 10: Reporting and Analyzing Liabilities

Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $400,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. What is the amount of interest Sparks must pay the bondholders in 2013?

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.

Winrow Company received proceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the amount of interest expense Winrow will show with relation to these bonds for the year ended December 31, 2014?

The interest charged on a $70,000 note payable, at the rate of 6%, on a 90-day note would be

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $252,000, what is the amount of the sales taxes owed to the taxing agency?

Notes payable usually require the borrower to pay interest.

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.

Most notes are not interest bearing.

When bonds are issued at a premium, the total interest cost of the bonds over the life of the bonds is equal to the amount of

Which of the following is not an advantage of issuing bonds instead of common stock? A) Stockholder control is not affected B) Earnings per share on common stock may be lower C) Tax savings result D) Each of these answer choices is an advantage.

The amount of sales tax collected by a retail store when making sales is

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $420,000, what is the amount of the sales taxes owed to the taxing agency?

Warner Company issued $4,000,000 of 6%, 10-year bonds on one of its interest dates for $3,454,800 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. How much bond interest expense (to the nearest dollar) should be reported on the income statement for the end of the first year?

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

Al's Bookstore has collected $750 in sales taxes during April. If sales taxes must be remitted to the state government monthly, what entry will Al's Bookstore make to show the April remittance?

West County Bank agrees to lend Drake Builders Company $200,000 on January 1. Drake Builders Company signs a $200,000, 6%, 6-month note. What is the adjusting entry required if Drake Builders Company prepares financial statements on March 30?

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.

Selected data from 2014 financial statements of Xi Corporation include the following (amount in millions): The debt to assets ratio is

Winrow Company received proceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the amount of interest Winrow must pay the bondholders in 2013?

The following totals for the month of March were taken from the payroll records of Kern Company. The journal entry to record the monthly payroll on March 30 would include a