Question 1

The premium on a bond is ______ and ______ each period

Accepted Answer

A)  depreciated; increases 
B)  expensed; increases 
C)  increased; credited 
D)  amortized; decreases 
A)  depreciated; increases 
B)  expensed; increases 
C)  increased; credited 
D)  amortized; decreases

Question 2

On January 1,2016,a company issues 3-year bonds with a face value of $200,000 and a stated interest rate of 8%.Because the market interest rate is lower than the stated interest rate,the company receives $209,000 for the bond.
Required:
Fill in the table assuming the company uses the straight-line bond amortization.

Accepted Answer

The answer of On January 1,2016,a company issues 3-year bonds...

Question 3

Consider the following information:

Required:
Part a.Calculate the debt-to-assets ratio.
Part b.Describe what the debt-to-assets ratio tells you and how to interpret it.
Part c.Calculate the times interest earned.
Part d.Comment on the results of your times interest earned analysis.

Accepted Answer

Part a
Debt-to-assets ratio = Total liab

Question 4

Payroll taxes paid by employees include which of the following?

Accepted Answer

A)  Federal income tax, federal unemployment tax, and Medicare 
B)  Social security, federal unemployment tax, and state unemployment tax 
C)  Federal income tax withheld, state income tax withheld, and Medicare 
A)  Federal income tax, federal unemployment tax, and Medicare 
B)  Social security, federal unemployment tax, and state unemployment tax 
C)  Federal income tax withheld, state income tax withheld, and Medicare

Question 5

A company issued 10-year,8% bonds with a face value of $200,000.Interest is paid annually.The market rate on the issue date was 7.5% and the company received $206,948 in cash proceeds.Which of the following statements is correct?

Accepted Answer

A)  The company must pay $184,000 at maturity plus $16,000 in interest each year for 10 years. 
B)  The company must pay $206,948 at maturity plus $15,000 in interest each year for 10 years. 
C)  The company must pay $200,000 at maturity plus $16,000 in interest each year for 10 years. 
D)  The company must pay $200,000 at maturity plus $15,000 in interest each year for 10 years. 
A)  The company must pay $184,000 at maturity plus $16,000 in interest each year for 10 years. 
B)  The company must pay $206,948 at maturity plus $15,000 in interest each year for 10 years. 
C)  The company must pay $200,000 at maturity plus $16,000 in interest each year for 10 years. 
D)  The company must pay $200,000 at maturity plus $15,000 in interest each year for 10 years.

Question 6

The discount on a bonds payable becomes:

Accepted Answer

A)  additional interest expense in only the year the bonds are issued. 
B)  additional interest expense over the life of the bonds. 
C)  a reduction in interest expense in only the year the bonds mature. 
D)  a reduction in interest expense over the life of the bonds. 
A)  additional interest expense in only the year the bonds are issued. 
B)  additional interest expense over the life of the bonds. 
C)  a reduction in interest expense in only the year the bonds mature. 
D)  a reduction in interest expense over the life of the bonds.

Question 7

The carrying value of bonds payable equals:

Accepted Answer

A)  bonds payable minus any premium on bonds payable. 
B)  bonds payable minus any discount on bonds payable. 
C)  bonds payable plus any discount on bonds payable. 
D)  bonds payable plus accrued interest payable. 
A)  bonds payable minus any premium on bonds payable. 
B)  bonds payable minus any discount on bonds payable. 
C)  bonds payable plus any discount on bonds payable. 
D)  bonds payable plus accrued interest payable.

Question 8

No mention is required in the financial statements for contingent liabilities that are:

Accepted Answer

A)  probable. 
B)  remote. 
C)  possible. 
D)  likely. 
A)  probable. 
B)  remote. 
C)  possible. 
D)  likely.

Question 9

Contingent liabilities arise from past transactions,but depend on future events.

Accepted Answer

A) True 
 B)False

Question 10

The Payroll records of Oregon Mist contained the following information for the month of November:
 
The journal entry to record the monthly Payroll Tax Expense would include a:

Accepted Answer

A)  debit to Payroll Tax Expense of $25,200. 
B)  credit to FICA Taxes Payable of $43,400. 
C)  debit to Payroll Tax Expense of $48,650. 
D)  debit to Payroll Tax Expense of $26,950. 
A)  debit to Payroll Tax Expense of $25,200. 
B)  credit to FICA Taxes Payable of $43,400. 
C)  debit to Payroll Tax Expense of $48,650. 
D)  debit to Payroll Tax Expense of $26,950.

Question 11

If total assets increase but total liabilities remain the same,what is the impact on the debt-to-assets ratio?

Accepted Answer

A)  It increases. 
B)  It remains the same. 
C)  It cannot be determined without additional information. 
D)  It decreases. 
A)  It increases. 
B)  It remains the same. 
C)  It cannot be determined without additional information. 
D)  It decreases.

Question 12

The Ideal Corp.has the following information its payroll records:
 
The employer amount of FICA taxes that Ideal is required to pay is equal to the amount that it withholds from its employees.Assume no other payroll taxes are incurred at this time.What is Ideal's total expense with regards to this payroll?

Accepted Answer

A)  $80,000 
B)  $85,000 
C)  $100,000 
D)  $105,000 
A)  $80,000 
B)  $85,000 
C)  $100,000 
D)  $105,000

Question 13

During the year,the company recorded services provided to customers on account.What effect will this transaction have on the debt-to-assets and times interest earned ratios?

Accepted Answer

A)  The debt-to-assets ratio will decrease and the times interest earned will increase. 
B)  The debt-to-assets ratio will increase and the times interest earned will not change 
C)  Both ratios will decrease. 
D)  Both ratios will increase. 
A)  The debt-to-assets ratio will decrease and the times interest earned will increase. 
B)  The debt-to-assets ratio will increase and the times interest earned will not change 
C)  Both ratios will decrease. 
D)  Both ratios will increase.

Question 14

A company issued 10-year,7% bonds with a face value of $100,000.The company received $97,947 for the bonds.Using the straight-line method of amortization,the amount of interest expense for the first interest period is:

Accepted Answer

A)  $7,000.00 
B)  $7,205.30 
C)  $6,794.70 
D)  $2,053.00 
A)  $7,000.00 
B)  $7,205.30 
C)  $6,794.70 
D)  $2,053.00

Question 15

Which of the following are generally recorded as liabilities on the balance sheet if the loss can be reasonably estimated?

Accepted Answer

A)  Remote likelihood liabilities 
B)  Possible contingent liabilities 
C)  Probable contingent liabilities 
D)  Immaterial contingent liabilities 
A)  Remote likelihood liabilities 
B)  Possible contingent liabilities 
C)  Probable contingent liabilities 
D)  Immaterial contingent liabilities

Question 16

Use the information above to answer the following question.If the balance sheet date corresponded with the date of the bond issue,what carrying value would be reported on the balance sheet?

Accepted Answer

A)  $791,800 
B)  $816,400 
C)  $783,600 
D)  $800,000 
A)  $791,800 
B)  $816,400 
C)  $783,600 
D)  $800,000

Question 17

Acme Manufacturing retired an issue of bonds before they matured.The bonds had been issued at their face value of $500,000,and the cash paid for the retirement amounted to $503,250.What journal entry was made to record the bond retirement?

Accepted Answer

A)  Debit Bonds Payable for $500,000, debit Loss on Bond Retirement for $3,250, and credit Cash for $503,250 
B)  Debit Bonds Payable for $503,250, credit Gain on Bond Retirement for $3,250, and credit Cash for $500,000 
C)  Debit Bonds Payable and credit Cash for $503,250 
D)  Debit Bonds Payable for $500,000, debit Gain on Bond Retirement for $3,250, and credit Cash for $503,250 
A)  Debit Bonds Payable for $500,000, debit Loss on Bond Retirement for $3,250, and credit Cash for $503,250 
B)  Debit Bonds Payable for $503,250, credit Gain on Bond Retirement for $3,250, and credit Cash for $500,000 
C)  Debit Bonds Payable and credit Cash for $503,250 
D)  Debit Bonds Payable for $500,000, debit Gain on Bond Retirement for $3,250, and credit Cash for $503,250

Question 18

On November 1,2015,ABC Corp.borrowed $100,000 cash on a 1year,6% note payable that requires ABC to pay both principal and interest on October 31,2016.Given no prior adjusting entries have been recorded,the adjusting journal entry on December 31,2015,ABC's year end,would include a:

Accepted Answer

A)  credit to Cash of $1,000. 
B)  debit to Interest Expense of $6,000. 
C)  credit to Interest Payable of $1,000. 
D)  credit to Note Payable of $1,000. 
A)  credit to Cash of $1,000. 
B)  debit to Interest Expense of $6,000. 
C)  credit to Interest Payable of $1,000. 
D)  credit to Note Payable of $1,000.

Question 19

Your company sells $40,000 of one-year,10% bonds for an issue price of $39,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Accepted Answer

A)  $39,000. 
B)  $40,000. 
C)  $43,000. 
D)  $44,000. 
A)  $39,000. 
B)  $40,000. 
C)  $43,000. 
D)  $44,000.

Question 20

Using straight-line amortization,when a bond is sold at a discount:

Accepted Answer

A)  Bonds Payable declines by a constant amount each year. 
B)  Interest Expense declines by a constant amount each year. 
C)  the carrying value of the bonds declines by a constant amount each year. 
D)  Interest Expense is a constant amount each year. 
A)  Bonds Payable declines by a constant amount each year. 
B)  Interest Expense declines by a constant amount each year. 
C)  the carrying value of the bonds declines by a constant amount each year. 
D)  Interest Expense is a constant amount each year.

The premium on a bond is and each period

Consider the following information: Required: Part a.Calculate the debt-to-assets ratio. Part b.Describe what the debt-to-assets ratio tells you and how to interpret it. Part c.Calculate the times interest earned. Part d.Comment on the results of your times interest earned analysis.

Payroll taxes paid by employees include which of the following?

A company issued 10-year,8% bonds with a face value of $200,000.Interest is paid annually.The market rate on the issue date was 7.5% and the company received $206,948 in cash proceeds.Which of the following statements is correct?

The discount on a bonds payable becomes:

The carrying value of bonds payable equals:

No mention is required in the financial statements for contingent liabilities that are:

Contingent liabilities arise from past transactions,but depend on future events.

The Payroll records of Oregon Mist contained the following information for the month of November: The journal entry to record the monthly Payroll Tax Expense would include a:

If total assets increase but total liabilities remain the same,what is the impact on the debt-to-assets ratio?

During the year,the company recorded services provided to customers on account.What effect will this transaction have on the debt-to-assets and times interest earned ratios?

A company issued 10-year,7% bonds with a face value of $100,000.The company received $97,947 for the bonds.Using the straight-line method of amortization,the amount of interest expense for the first interest period is:

Which of the following are generally recorded as liabilities on the balance sheet if the loss can be reasonably estimated?

Use the information above to answer the following question.If the balance sheet date corresponded with the date of the bond issue,what carrying value would be reported on the balance sheet?

Acme Manufacturing retired an issue of bonds before they matured.The bonds had been issued at their face value of $500,000,and the cash paid for the retirement amounted to $503,250.What journal entry was made to record the bond retirement?

On November 1,2015,ABC Corp.borrowed $100,000 cash on a 1year,6% note payable that requires ABC to pay both principal and interest on October 31,2016.Given no prior adjusting entries have been recorded,the adjusting journal entry on December 31,2015,ABC's year end,would include a:

Your company sells $40,000 of one-year,10% bonds for an issue price of $39,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Using straight-line amortization,when a bond is sold at a discount:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 10: Reporting and Interpreting Liabilities

The premium on a bond is ______ and ______ each period

Consider the following information: Required: Part a.Calculate the debt-to-assets ratio. Part b.Describe what the debt-to-assets ratio tells you and how to interpret it. Part c.Calculate the times interest earned. Part d.Comment on the results of your times interest earned analysis.

Payroll taxes paid by employees include which of the following?

A company issued 10-year,8% bonds with a face value of $200,000.Interest is paid annually.The market rate on the issue date was 7.5% and the company received $206,948 in cash proceeds.Which of the following statements is correct?

The discount on a bonds payable becomes:

The carrying value of bonds payable equals:

No mention is required in the financial statements for contingent liabilities that are:

Contingent liabilities arise from past transactions,but depend on future events.

The Payroll records of Oregon Mist contained the following information for the month of November: The journal entry to record the monthly Payroll Tax Expense would include a:

If total assets increase but total liabilities remain the same,what is the impact on the debt-to-assets ratio?

During the year,the company recorded services provided to customers on account.What effect will this transaction have on the debt-to-assets and times interest earned ratios?

A company issued 10-year,7% bonds with a face value of $100,000.The company received $97,947 for the bonds.Using the straight-line method of amortization,the amount of interest expense for the first interest period is:

Which of the following are generally recorded as liabilities on the balance sheet if the loss can be reasonably estimated?

Use the information above to answer the following question.If the balance sheet date corresponded with the date of the bond issue,what carrying value would be reported on the balance sheet?

Acme Manufacturing retired an issue of bonds before they matured.The bonds had been issued at their face value of $500,000,and the cash paid for the retirement amounted to $503,250.What journal entry was made to record the bond retirement?

On November 1,2015,ABC Corp.borrowed $100,000 cash on a 1year,6% note payable that requires ABC to pay both principal and interest on October 31,2016.Given no prior adjusting entries have been recorded,the adjusting journal entry on December 31,2015,ABC's year end,would include a:

Your company sells $40,000 of one-year,10% bonds for an issue price of $39,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Using straight-line amortization,when a bond is sold at a discount:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

The premium on a bond is and each period