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

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.

On November 1, Greenfield Corporation borrowed $55,000 from a bank and signed a 12%, 90-day note payable in the amount of $55,000.If you assume 360 days in year, the November 30 adjusting entry will be:

Match each of the following terms related to interest and time value of money calculations to their appropriate definition. -Interest calculated on the principal plus previous amounts of interest accumulated.

From the following list, identify whether the change in the account balance during the year would be reported as an operating (O), an investing (I), or a financing (F) activity or not separately reported on the statement of cash flows (N).Assume that the indirect method is used to determine the cash flows from operating activities. -Salaries and wages payable

An invoice received from a supplier for $8,000 on January 1 with terms 1/15, n/30 means that the company should pay

A company's balance sheet shows the account, Notes Payable.This resulted from a loan made by the company's bank.If the end-of-year balance in the notes payable account exceeds the beginning-of-year balance by $5,000, this is shown on the cash flow statement as an

The terms referring to contingencies differ between U.S.GAAP and IFRS.

Cole Company had the following accounts and balances on December 31, 2016: Income Taxes Payable \ 51,250 Cash 20,000 Notes Payable, 10\%, due June 2, 2017 1,000 Accounts Receivable 267,500 Equipment 950,000 Accounts Payable 104,400 Inventory 85,000 Land 600,000 Allowance for Doubtful Accounts 12,000 Discount on Notes Payable 150 Notes Receivable, maturity 2/1/2023 5,000 Current Maturities of Long-Term Debt 6,900 Unearned Revenue 4,320 Interest Payable 1,010 Wages Payable 6,000 Marketable Securities 40,000 Capital Stock 900,000 Required: 1.Compute Cole's working capital. 2.Compute Cole's current ratio.What does this ratio indicate about Cole's condition?

If you plan to invest $10,000 and want to determine how much will be accumulated in six years if you earn interest at 7% per year, you would calculate this using the future value of an annuity.

If a 12% interest rate is compounded quarterly for 3 years, then there would be __________________________ compounding periods.

To determine whether a lottery winner would prefer to receive the money in a single lump sum immediately or receive an equal amount over a period of years, you would use which type of time value of money calculation?

All of the following statements about current liabilities are true except:

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. Barton Company has just purchased a machine with a cost of $100,000, and signed a note agreeing to pay the manufacturer equal annual amounts of $17,400.If the current rate of interest is 8%, how many equal annual payments will be made?

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. To calculate the future value of an amount that is invested at 12%, compounded quarterly, at the end of three years, the interest factor used would be

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

A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in inventory.If current liabilities are $14,350, then the quick ratio would be

Match each of the following terms pertaining to liabilities to their definitions. -Accounts that will be satisfied within one year or the next operating cycle.

When borrowing money to be repaid in regular future payments, the payment is based on the present value of the loan, the interest rate and the length of the loan.

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2016 balance sheet. -An amount of money owed to the federal government based on the company's annual income.

Warranty expenses are the result of the selling company's estimate of the number of units sold during the current year that may become defective and need repair or replacement during the warranty period.