Exam 9: Current Liabilities and Long-Term Debt

$400,000 of 11%, 10-year bonds were sold for $370,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to:

Proper classification of liabilities can pose an ethical challenge, since it might be tempting to manipulate them in order to make the business appear more profitable.

During the month, TNT Construction paid $300 to settle warranty claims. TNT uses an estimated warranty account. The journal entry to record the claims payment would have been:

Estimated liabilities are generally classified as long-term liabilities.

When a company settles a warranty claim by replacing the defective goods, the journal entry will include a debit to _______ and a credit to _______.

Which of the following would be a required payroll tax for both the employee and the employer?

The journal entry to record $300,000 of bonds that were issued at 104 would be to:

You just purchased a new cell phone, which comes with a manufacturer's warranty of one year. The company that manufactures the cell phone would record the warranty as a(n):

What is the purpose of a bond discount?

Which of the following would be treated as a rental agreement?

There are times when contingent liabilities are never recorded.

A debt ratio of 0.50 (50%)would mean that half of a company's assets would need to be sold to pay off all of its current liabilities.

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

Debenture bonds are the same as:

Which of the following does NOT have an effect on the amount of federal income tax to be withheld from an employee's pay?

TLR Productions issued $10,000 of 6% bonds payable when the market rate was 8%; therefore, they will sell them for more than $10,000.

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

The maximum tax credit an employer can get for FUTA if they pay unemployment taxes to a state is:

Richard is paid a salary of $6,000. At the end of November, his cumulative gross earnings were $97,000. How much will his employer take out for the OASDI portion of social security for December? (Round your final answer to the nearest cent.)

The Discount on Bonds Payable account is known as an adjunct account.