Exam 10: Reporting and Analyzing Liabilities

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.

On January 1, 2014, Hannigan Company issued bonds with a face value of $600,000. The bonds carry a stated interest of 7% payable each January 1. a. Prepare the journal entry for the issuance assuming the bonds are issued at 97. b. Prepare the journal entry for the issuance assuming the bonds are issued at 102.

Scribner Company issued $400,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

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

Failure to record a liability will probably

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. Interest expense for the year ended December 31, 2013 was

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 carrying value of the bonds on January 1, 2015?

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

Hulse Corporation retires its $600,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $622,470. The entry to record the redemption will include a

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

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 75,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

In providing accounting services to small business, you encounter the following situations pertaining to cash sales. (1) Kushner Company rings up sales and sales taxes separately on its cash register. On April 10 the register totals are sales $40,000 and sales taxes $2,800. (2) Grant Company does not segregate sales and sales taxes. Its register total for April 15 is $22,260, which includes a 6% sales tax. Instructions Prepare the entries to record the sales transactions and related taxes for (a) Kushner Company and (b) Grant Company.

Premium 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.

Moon Company issued $500,000, 10%, 5-year bonds on January 1, 2014, at 106. Interest is payable annually on January 1. Moon uses the effective-interest method of amortization and has a calendar year end and the bonds were issued for an effective interest rate of 8%. Instructions Prepare all journal entries made in 2014 related to the bond issue.

If $500,000 par value bonds with a carrying value of $476,000 are redeemed at 97, a loss on redemption will be recorded.

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. What amount of discount (to the nearest dollar) should be amortized for the first interest period?

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

A corporation issues $200,000, 10%, 5-year bonds on January 1, 2014, for $191,600. 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, 2014's adjusting entry is

Renfro Company issued $300,000 of 8%, 10-year bonds at 102. Interest is paid annually, and the straight-line method is used for amortization. Assume that the market rate for similar investments is 7%. The bonds are issued on the date of the bonds. a. What amount was received for the bonds? b. How much interest is paid each interest period? c. What is the premium amortization for the first interest period? d. How much interest expense is recorded on the first interest date? e. What is the carrying value of the bonds after the first interest date?

The market value (present value) of a bond is a function of all of the following except the