Exam 9: Current Liabilities, Contingencies, and the Time Value of Money

The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Denise wants to help pay for her niece's college tuition. Her niece will begin college in one year. How much would Denise need to put into a savings account today at 6% so that her niece can withdraw $10,000 per year for 4 years, and reduce the account balance to zero at the end of the 4 years?

Proctor Inc. has a weekly payroll of $8,000 for a 5-day workweek, Monday through Friday. If December 31, the last day of the accounting year, falls on Wednesday, Proctor would make an adjustment that would

Match each of the following terms pertaining to liabilities to their definitions. -The portion of a long-term liability that will be paid within one year of the balance sheet date.

A company has $200 in cash, $500 in accounts receivable, and $700 in inventory. If current liabilities are $400, then the quick ratio would be

A cereal company includes one premium coupon in every cereal box. Upon returning 10 such coupons to the company, a customer will be sent a free cereal bowl. In a recent year, the company sold 200,000 boxes of cereal for $1 a box. It is estimated that 20% of the coupons will be returned. If the cereal bowls cost the company $3 each, what amount of liability for premium redemptions must be recorded by the company?

Income taxes payable are recognized as an expense once they are paid to the respective government or taxing authority.

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays April 2, then the amount paid to the seller would be

Apply the time value of money in the following independent situations: 1. Jason Marx deposited $29,500 in the bank on January 1, 1998, at an interest rate of 12% compounded annually. How much has accumulated in the account by January1, 2015? 2. June Cunningham deposited $54,200 in the bank on January 1, 2005. On January 2, 2015, this deposit has accumulated to $106,611. Interest is compounded annually on the account. What rate of interest did June earn on the deposit?

The total amount of simple interest calculated annually on a $4,000 note payable in 5 years at 9% is:

In the statement of cash flows, a decrease in accounts payable would be shown as an increase in the Operating Activities category.

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2014 balance sheet. -An amount of money owed for years 2016 to 2020 to a creditor as annual installment payments on a ten-year note, due June 30, 2020.

Match each of the following terms related to interest and time value of money calculations to their appropriate definition. -The amount that will be accumulated in the future when one amount is invested at the present time and accrues interest until the future time.

The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. For a given single sum invested at 8% for 4 years, how will the future value be affected if the compounding period is changed from annual to quarterly?

The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. If interest is compounded annually, the total amount of interest on an $18,000 note payable for 4 years at 10% is

The total amount of simple interest calculated annually on a $6,000 note payable for 3 years at 11% is

Riley Corporation manufactures and sells weedeaters. Riley provides all customers with a three-year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 85,000 weedeaters for $225 each. Analysis of past warranty records indicates that 8% of all sales will be returned for repair within the warranty period. Riley expects to incur expenditures of $15 to repair each weedeater. The account Estimated Liability for Warranties had a balance of $115,000 on January 1. Riley incurred $90,000 in actual expenditures during the year. REQUIRED: Identify all necessary transactions to record the events related to the warranty transactions during the year and show their accounting equation effects. Determine the adjusted ending balance in the Estimated Liability for Warranties account.

International accounting standards require companies to present classified balance sheets with liabilities classified as either current or long term.

Match each of the following terms pertaining to liabilities to their definitions. -A liability that involves an existing condition for which the outcome is not known with certainty and depends on some future event.

If the market value that you paid for a car is known and the annual payment and number of payments is known, the table factor to help find the interest rate can be calculated by dividing .

Refer to the data for Valance & Company. REQUIRED: 1 What current liabilities appearing on the balance sheet do not appear in the operating activities section of the statement of cash flows? Why? 2 What current liabilities appear in the operating activities category of Valance's statement of cash flows? How does the change for each year affect the cash flows from operating activities for that year?