Exam 9: Reporting and Analysing Liabilities

Bondi Bank agrees to lend Tawonga Construction Company Ltd $200,000 on 1 January. Tawonga Construction Company Ltd signs a $200,000, 4%, 9-month note. -What is the adjusting entry required if Tawonga Construction Company Ltd prepares financial statements on 30 June?

Match the descriptions with their terms: -An obligation than can reasonably be expected to be paid within one year or the operating cycle of a business

Match the descriptions with their terms: -The value today of an amount to be paid or received at some date in the future after taking into account current interest rates

Match (by letter) each of the following as being : -Unsecured notes with 9 months to maturity

Liabilities for which the amount of the future sacrifice is uncertain are regarded as:

The face value of a note is also known as the:

On 1 March, Marcel Ltd borrows $90,000 from the Eastward Bank by signing a 6-month, 9%, interest-bearing note. Instructions: Prepare the necessary entries below associated with the note payable on the books of Marcel Ltd. (a) Prepare the entry on 1 March when the note was issued. (b) Prepare any adjusting entries necessary on 30 June in order to prepare the semi-annual financial statements. Assume no other interest accrual entries have been made. (c) Prepare the entry to record payment of the note at maturity.

On 1 January 2019 the Guildford Group Ltd issued $800,000, 8%, 10-year unsecured notes at face value. Interest is payable semi-annually on 1 July and 1 January. Guildford Group has a calendar year end. Instructions: Prepare all entries related to the unsecured note issue for 2019.

If a borrower is unable to repay a mortgage, the lender has no right to recover the debt against the mortgaged property.

Notes payable usually require the borrower to pay:

The account 'Revenue received in advance' is properly treated as a/an:

Which of the following is an example of a contingent liability?

Wayfarer Ltd withheld $54 000 of 'PAYG'. The entry to record payment of the tax to the Tax Office is:

The Candy Company Ltd has the following selected accounts after posting adjusting entries: Required: (a) Prepare the current liability section of The Candy Company's statement of financial position, assuming $25,000 of the mortgage is payable next year. (b) Comment on The Candy Company's liquidity, assuming total current assets are $400,000.

Match (by letter) each of the following as being : -Warranty expense

Obligations for which the amount of the future sacrifice is so uncertain that it cannot be measured reliably are classified as:

A warranty is an obligation of the receiver of goods and services that a future claim will not be made against the supplier of the goods if the goods prove to be unsatisfactory.

Match the descriptions with their terms: -Rate used to determine the amount of interest the borrower pays and the investor receives

Timeless Ltd produces clocks and sells them with a one-year warranty. The warranty provision account currently has a debit balance of $4,000. The estimated cost of repairing clocks that have already been sold is $18,000. The adjustment needed to update the warranty provision account is:

When a company repurchases its unsecured notes, the debt has been: