Question 1

The interest charged on a $90,000 note payable, at the rate of 6%, on a 60-day note would be

Accepted Answer

A) $5,400. 
B) $2,700. 
C) $1,350. 
D) $900.

Question 2

Five thousand bonds with a face value of $1,000 each, are sold at 97.The entry to record the issuance is

Accepted Answer

The answer of Five thousand bonds with a face value...

Question 3

Larson Company issued $1,000,000 of 8%, 5-year bonds at 106.Assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment point?

Accepted Answer

A) $6,000 
B) $12,000 
C) $80,000 
D) $68,000

Question 4

When bonds are retired before maturity,

Accepted Answer

A) only a loss on redemption can be recorded. 
B) only a gain on redemption can be recorded. 
C) either a gain or a loss on redemption can be recorded. 
D) neither a gain nor a loss on redemption can be recorded.

Question 5

If bonds are originally sold at a discount using the straight-line amortization method,

Accepted Answer

A) interest expense in the earlier years of the bond's life will be less than the interest to be paid. 
B) interest expense in the earlier years of the bond's life will be the same as interest to be paid. 
C) unamortized discount is subtracted from the face value of the bond to determine its carrying value. 
D) unamortized discount is added to the face value of the bond to determine its carrying value.

Question 6

The present value of a bond is also known as its

Accepted Answer

A) face value. 
B) market price. 
C) future value. 
D) deferred value.

Question 7

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

Accepted Answer

A) a premium. 
B) a discount. 
C) par. 
D) either a discount or premium.

Question 8

The current market value of a bond is equal to the present value of all future cash payments promised by the bond.

Accepted Answer

A) True 
 B)False

Question 9

On January 1, Thompson Corporation issued $4,000,000, 14%, 5-year bonds with interest payable on December 31.The bonds sold for $4,288,384.The market rate of interest for these bonds was 12%.On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

Accepted Answer

A) $480,000. 
B) $502,324. 
C) $514,606. 
D) $560,000.

Question 10

The interest charged on a $350,000 note payable, at the rate of 6%, for a year would be

Accepted Answer

A) $21,000. 
B) $10,500. 
C) $5,250. 
D) $1,750.

Question 11

Notes payable are often used instead of accounts payable.

Accepted Answer

A) True 
 B)False

Question 12

The calculation of interest to be paid each interest period in connection with a bond payable is not influenced by any premium or discount upon issuance.

Accepted Answer

A) True 
 B)False

Question 13

Notes payable usually require the borrower to pay interest.

Accepted Answer

A) True 
 B)False

Question 14

Liabilities are classified as current or long-term based on their

Accepted Answer

A) description. 
B) payment terms. 
C) due date. 
D) amount.

Question 15

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

Accepted Answer

A) a bond certificate. 
B) a bond debenture. 
C) trading on the equity. 
D) a convertible bond.

Question 16

Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of

Accepted Answer

A) $486,250. 
B) $485,125. 
C) $485,013. 
D) $487,500.

Question 17

A cash register tape shows cash sales of $3,000 and sales taxes of $200.The journal entry to record this information is

Accepted Answer

The answer of A cash register tape shows cash sales...

Question 18

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

Accepted Answer

A) True 
 B)False

Question 19

The following totals for the month of April were taken from the payroll records of Noll Company.  The journal entry to record the monthly payroll on April 30 would include a

Accepted Answer

A) debit to Salaries and Wages Expense for $120,000. 
B) credit to Salaries and Wages Payable for $120,000. 
C) debit to Salaries and Wages Payable for $120,000. 
D) debit to Salaries and Wages Expense for $81,320.

Question 20

The following partial amortization schedule is available for Courtney Company who sold $750,000, five-year, 10% bonds on January 1, 2020, for $780,000 and uses annual straight-line amortization.  Which of the following amounts should be shown in cell (iv)?

Accepted Answer

A) $33,000 
B) $27,000 
C) $36,000 
D) $24,000

Exam 10: Reporting and Analyzing Liabilities

The interest charged on a $90,000 note payable, at the rate of 6%, on a 60-day note would be

Five thousand bonds with a face value of $1,000 each, are sold at 97.The entry to record the issuance is

Larson Company issued $1,000,000 of 8%, 5-year bonds at 106.Assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment point?

When bonds are retired before maturity,

If bonds are originally sold at a discount using the straight-line amortization method,

The present value of a bond is also known as its

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

The current market value of a bond is equal to the present value of all future cash payments promised by the bond.

On January 1, Thompson Corporation issued $4,000,000, 14%, 5-year bonds with interest payable on December 31.The bonds sold for $4,288,384.The market rate of interest for these bonds was 12%.On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

The interest charged on a $350,000 note payable, at the rate of 6%, for a year would be

Notes payable are often used instead of accounts payable.

The calculation of interest to be paid each interest period in connection with a bond payable is not influenced by any premium or discount upon issuance.

Notes payable usually require the borrower to pay interest.

Liabilities are classified as current or long-term based on their

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of

A cash register tape shows cash sales of $3,000 and sales taxes of $200.The journal entry to record this information is

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

The following totals for the month of April were taken from the payroll records of Noll Company. The journal entry to record the monthly payroll on April 30 would include a

The following partial amortization schedule is available for Courtney Company who sold $750,000, five-year, 10% bonds on January 1, 2020, for $780,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (iv) ?