Exam 11: Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

On July 1,2013,Avery Services issued a long-term note payable for $10,000.It is payable over a 5-year term in $2,000 installments on July 1 of each succeeding year.When the note was issued,the principal amount was recorded in Long-term notes payable and a second entry was made to reclassify the current portion.How will this information be shown on the balance sheet dated December 31,2013?

On December 31,2013,Peterson Sales has a Bonds payable balance of $40,000 and a Discount on bonds payable of $2,100.On the balance sheet,how will this information be shown?

On January 1,2013,Thames Company purchases property and signs a 6-year mortgage note $60,000 at 4%.Please see the partial amortization schedule below. - At the end of 2013,what amount would be shown on the balance sheet for mortgage payable (excluding the current portion)?

On November 1,2014,EZ Products borrowed $48,000 on a 5%,10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year.Please provide the journal entry to accrue interest expense for the period of November 1 through the end of the year.

Premium on bonds payable is spread over the term of the bonds and reduces total interest expense.

If $10,000 is invested for one year and earns an annual interest rate of 7%,it will grow in value to:

The balance in the Bonds payable account is a credit of $50,000.The balance in the Discount on bonds payable account is a debit of $1,500.The bond carrying amount is $51,500.

When a company accrues interest payable on a long-term note at year-end,the interest payable must be shown as a long-term liability on the balance sheet,along with the long-term note payable balance.

On January 2,2014,Mahoney Sales issued $10,000 in bonds for $10,900.They were 5-year bonds with a stated rate of 4%,and pay semiannual interest payments.Mahoney Sales uses the straight-line method to amortize the bond premium.On June 30,2014,when Mahoney makes the first payment to bondholders,how much will they report as interest expense?

Which of the following is TRUE of a discount on bonds payable?

Using the present value tables,please compute the present value of $20,000 discounted back 5 periods at 4%.

The current portion of notes payable must be reported on the balance sheet combined with the long-term portion under long-term liabilities.

Balances for bonds payable on the balance sheet will show the balances minus any discount or plus any premium.

On January 1,2013,Diab Services issued $140,000 of 4-year bonds with a stated rate of 9%.The market rate at time of issue was 8%,so the bonds were issued at a premium and sold for $144,758.Diab uses the effective-interest method to amortize bond premium.Semiannual interest payments are made on June 30 and December 31 of each year.Please complete the amortization table for the first four interest payments.

On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were sold at a premium,for a total of $20,750.The bonds pay semiannual interest payments on June 30 and December 31 of each year.On June 30,2013,how much is the total amount paid to bondholders?

If bonds with a face value of $100,000 are sold at 102,the amount of cash proceeds is:

If the difference between the effective-interest method of amortizing bond discount and the straight-line method is immaterial,then GAAP permits use of the straight-line method.

On November 1,2013,Archangel Services issued $200,000 of 10-year bonds with a stated rate of 3%.The bonds were sold at discount for $191,000 and make semiannual payments on April 30 and October 31.At December 31,2013,Archangel made an adjusting entry to accrue interest at year-end.Please provide that entry.

On January 1,2013,Thames Company purchases property and signs a 6-year mortgage note for $60,000 at 4%.Please see the partial amortization schedule below. AMORTIZATION SCHEDULE Principal \ 60,000.00 (partial) Rate 4.00\% Payment \ 980.00 At January 1,2013,what portion of the balance of the mortgage payable should be shown as a current liability?

On November 1,2013,EZ Products borrowed $48,000 on a 5%,10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year.On November 1,the principal amount was initially recorded as Long-term notes payable,and then a second entry was made to reclassify the current portion.Please provide the proper reclassification entry.