Exam 9: Current Liabilities and Long-Term Debt

Using the information below, write the journal entry to record the payment of the bond on the maturity date. A $400,000 issue of bonds that sold for $363,000 matures on August 1, 2015.

Bonds are interest-bearing notes that are issued to a single lender.

What effect will there be on reported liabilities and net income if a company does NOT accrue warranty expense?

Accrued liabilities, such as interest payable, would be considered a(n) __________.

According to the text, which current liability is generally listed first?

Contingent liabilities represent actual and not potential obligations.

Having liabilities classified incorrectly will have a big impact on the company's current and quick ratios.

A $10,000 bond issue with a stated rate of interest of 7%, when the market rate of interest is 8%, means that the bond will be sold for:

Identify whether each of the below items would be a known, estimated, or contingent liability: 1. A manufacturing company offers a one-year warranty on their product. 2. A lawsuit has been filed against Voltage Energy, a private company, for polluting a creek in a local community. The amount is estimated at $125,000 and there is a 70%-95% likelihood of the obligation occurring. 3. ABC Co. purchased machinery for $125,000 paying $75,000 in cash and borrowing the remainder by signing a one-year 5% note payable.

Journalize the following semi-annual bond interest payments on June 30: June 30 a. 10-year 8% $250,000 bond that sold for $300,000. June 30 b. 5-year 5% $300,000 bond that sold for $280,000. June 30 c. 15-year 10% $500,000 bond that sold for $500,000.

Journalize the following bond issues: June 12 Issued $500,000 at 98. June 18 Issued $250,000 at 106. June 22 Issued $350,000 at 100.

Tim Hortons is a public company and prepares its financial statements in accordance to IFRS. The company has a contingent liability estimated at $232,000. The likelihood of the obligation occurring is remote or < 5%. What is the appropriate accounting treatment for the company?

The rate of interest that is printed on the bond is called the __________ rate of interest.

Which of the following would be considered a known liability?

A contingent liability arises because of a past event, but is dependent upon a future event.

A $150,000 issue of bonds that sold at 93.8 will cost __________.

Journalize the following transactions: A magazine sells a 12-month magazine subscription for $60 per year. The company has collected cash for 1,200 subscriptions. Record the journal entries for: Receipt of cash for the subscriptions (Feb 13). Amount of revenue earned after mailing out 7 months of magazines (Sept 13).

Classify the following accounts, which were included in Aztec Company's December 31st trial balance, and calculate the company's current ratio and debt ratio. The note is payable in equal installments of principal over each of the four years.

Using the information below, write the journal entry to record the payment of the bond on the maturity date. A $250,000 issue of bonds that sold for $275,000 matures on June 25, 2020.

A mortgage is a special type of long-term note payable.