Exam 9: Current Liabilities, Contingencies, and the Time Value of Money

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. - Barton Company has just purchased a machine with a cost of $100,000 and signed a note agreeing to pay the manufacturer equal annual amounts of $17,400.If the current rate of interest is 8%,how many equal annual payments will be made?

If a 12% interest rate is compounded quarterly for three years,then there would be __________ compounding periods.

When a liability is accrued,the account debited in the transaction is a stockholders' equity account.

The issue price of a bond is based on the __________ of the cash flows that the bond will produce.

The total amount of simple interest calculated annually on a $4,000 note payable in five years at 9% is

Proctor Inc.has a weekly payroll of $8,000 for a five-day workweek,Monday through Friday.If December 31,the last day of the accounting year,falls on Wednesday,Proctor would make an adjustment that would

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. - Josh and Sara want to buy a house in four years.If the house will cost $180,000,how much must they deposit at the end of every year for the next four years at 5% compounded annually in order to buy the house?

An annuity is a series of equal payments made at equal intervals in the future.

For a given single sum invested at 8% for four years,how will the future value be affected if the compounding period is changed from quarterly to annually?

Almost all current liabilities affect the Operating category of the statement of cash flows,but one that does not affect cash provided by operating activities is

A company has $200 in cash,$500 in accounts receivable,and $700 in inventory.If current liabilities are $400,then the current ratio would be

Which of the following accounts is not classified as a current liability?

A remotely possible loss from a lawsuit is not reported on the balance sheet as a current liability.

You just purchased an automobile for $19,450 and must decide how to pay for it.Your local bank has granted you a five-year loan.Annual payments on the loan will be made at the end of each year and the amount of the loan payments,which include principal and interest,is $5,000 per year.What interest rate is being charged on the loan?

Note Disclosure of Legal Matters Use the note disclosure of legal matters below to answer the questions that follow. Note 13—Legal Matters On December 14, 2017, the Company was served with a class action complaint filed in federal court in Burlington, Vermont. The complaint, captioned John Doe vs. The Company was filed by a Company’s shareholder on behalf of himself and purportedly on behalf of all other Company’s shareholders who purchased the common stock of the Company during the period from March 25, 2016, through December 19, 2016. Plaintiff alleges that the Company violated the federal securities laws by making, in 2016, untrue statements of material facts and omitting to state material facts primarily concerning the Company's construction and start-up of its new manufacturing facility. Also named as defendants in the Complaint are certain present and former officers and directors of the Company. Plaintiff is seeking an unspecified amount of monetary damages. While this action is in its preliminary stages, management believes, based on an initial review, the allegations made in the lawsuit are without merit and the Company intends to defend the lawsuit vigorously. -Review the note disclosure of legal matters. Required (1)What type of liability does this lawsuit typify? (2)In your opinion,should the company prepare a journal entry in 2017 to record a liability for this lawsuit? Why or why not?

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. - Approximately how many years will it take for a sum invested at 8% with annual compounding to quadruple?

Estimated liability for product warranties to be paid in the upcoming year is a current liability.

Redfern Company has current assets of $150,000 and current liabilities of $60,000.How much inventory could it purchase on account and achieve its minimum desired current ratio of 2 to 1?

According to the text,almost all current liabilities appear in the Operating Activities category of the statement of cash flows,but there are exceptions.Explain the exceptions and give an example.

Current liabilities are defined as those liabilities that will be satisfied