Exam 10: Reporting and Analyzing Liabilities

A $20,000, 8%, 9-month note payable requires an interest payment of $1,200 at maturity.

Stockholders of a company may be reluctant to finance expansion through issuing more equity because

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

If a corporation issued bonds at an amount less than face value, it indicates that the corporation has a weak credit rating.

Identify three taxes commonly paid by employers on employees' salaries and wages. (b) Where in the financial statements does the employer report taxes withheld from employees' pay?

In a monthly mortgage payment, the same amount is recorded as interest expense as in the previous month's payment.

Bonds that are issued against the general credit of the borrower are called

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)?

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. The journal entry to be recorded at the end of the second year for the payment of interest and the amortization of discount will include a

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments added to the premium.

Moss County Bank agrees to lend the Sadowski Brick Company $300,000 on January 1. Sadowski Brick Company signs a $300,000, 6%, 9-month note. What entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

On January 1, 2014, $2,000,000, 5-year, 10% bonds, were issued for $2,120,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize premium on bonds payable, the monthly amortization amount is

A $900,000 bond was retired at 98 when the carrying value of the bond was $888,000. The entry to record the retirement would include a

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

A cash register tape shows cash sales of $6,000 and sales taxes of $300. The journal entry to record this information is

If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will increase as the bonds approach maturity.

In a recent year Ley Corporation had net income of $150,000, interest expense of $30,000, and a times interest earned ratio of 8. What was Ley Corporation's income before taxes for the year? A) $270,000 B) $240,000 C) $210,000 D) None of these answer choices are correct.

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. Winrow Company decided to redeem the bonds on January 1, 2015. What amount of gain or loss would Winrow report on its 2015 income statement?

Fornelli Corporation borrowed $480,000 from Central Bank on May 31, 2013. The three-year, 7% note required annual payments of $182,904 beginning May 31, 2014. The total amount of interest to be paid over the life of the loan is

The current carrying value of Pierce's $900,000 face value bonds is $896,600. If the bonds are retired at 102, what would be the amount Pierce would pay its bondholders?