Question 1

On September 1, Joe's Painting Service borrows $150,000 from National Bank on a 4-month, $150,000, 6% note. What entry must Joe's Painting Service make on December 31 before financial statements are prepared?

Accepted Answer

The answer of On September 1, Joe's Painting Service borrows...

Question 2

When current liabilities are presented under IFRS, they are generally shown

Accepted Answer

A)   alphabetically.
B)   in order of magnitude.
C)   in order of the dates they become due.
D)   in order of liquidity.IFRS.E) B) and C)
F) A) and B)

Question 3

Premium on Bonds Payable is a contra account to Bonds Payable.

Accepted Answer

A) True 
 B)False

Question 4

Kingery Sales Company has the following selected accounts after posting adjusting entries:  Instructions
Prepare the current liability section of Kingery Sales Company's balance sheet, assuming $16,000 of the mortgage is payable next year.

Accepted Answer

The answer of Kingery Sales Company has the following selected...

Question 5

Thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is  d

Accepted Answer

The answer of Thirty $1,000 bonds with a carrying value...

Question 6

Each of the following accounts is reported as long-term liabilities except

Accepted Answer

A)   Interest Payable.
B)   Bonds Payable.
C)   Discount on Bonds Payable.
D)   Premium on Bonds Payable.E) A) and B)
F) B) and D)

Question 7

A current liability is a debt that can be expected to be paid within ______________ year or the ______________, whichever is longer.

Accepted Answer

The answer of A current liability is a debt that...

Question 8

When bonds are converted into common stock and the conversion is recorded, the ________________ of the bonds is transferred to paid-in capital accounts.

Accepted Answer

The answer of When bonds are converted into common stock...

Question 9

Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1. Givens Brick Company signs a $600,000, 8%, 9-month note. What entry will Givens Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

Accepted Answer

The answer of Admire County Bank agrees to lend Givens...

Question 10

Working capital is current assets divided by current liabilities.

Accepted Answer

A) True 
 B)False

Question 11

The amount of sales tax collected by a retail store when making sales is

Accepted Answer

A)   a miscellaneous revenue for the store.
B)   a current liability.
C)   not recorded because it is a tax paid by the customer.
D)   recorded as an operating expense.E) C) and D)
F) B) and C)

Question 12

Lark Corporation retires its $800,000 face value bonds at 104 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $829,960. The entry to record the redemption will include a

Accepted Answer

A)   credit of $2,040 to Loss on Bond Redemption.
B)   debit of $2,040 to Loss on Bond Redemption.
C)   credit of $32,040 to Premium on Bonds Payable.
D)   debit of $32,000 to Premium on Bonds Payable.E) A) and B)
F) A) and C)

Question 13

Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year.

Accepted Answer

A) True 
 B)False

Question 14

Most notes are not interest bearing.

Accepted Answer

A) True 
 B)False

Question 15

If there is a loss on bonds redeemed early, it is

Accepted Answer

A)   debited directly to Retained Earnings.
B)   reported as an "Other Expense" on the income statement.
C)   reported as an "Extraordinary Item" on the income statement.
D)   debited to Interest Expense, as a cost of financing.E) None of the above
F) B) and C)

Question 16

223. On January 1, Dade Corporation issued $3,000,000, 7%, 5-year bonds with interest payable on December 31. The bonds sold for $3,216,288. The market rate of interest for these bonds was 6%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

Accepted Answer

A)   $180,000.
B)   $225,140.
C)   $192,977.
D)   $210,000.E) None of the above
F) B) and D)

Question 17

A $1,000 face value bond with a quoted price of 98 is selling for

Accepted Answer

A)   $1,000.
B)   $980.
C)   $908.
D)   $98.E) B) and D)
F) C) and D)

Question 18

194. On January 1, Gage Corporation issues $1,000,000, 10-year, 12% bonds at 95 with interest payable on January 1. The carrying value of the bonds, using straight-line amortization, at the end of the third interest period is:

Accepted Answer

A)   $965,000.
B)   $970,000.
C)   $930,000.
D)   $935,000.E) C) and D)
F) A) and C)

Question 19

A legal document which summarizes the rights and privileges of bondholders as well as the obligations and commitments of the issuing company is called

Accepted Answer

A)   a bond indenture.
B)   a bond debenture.
C)   trading on the equity.
D)   a term bond.E) B) and D)
F) A) and C)

Question 20

All of the following are reported as current liabilities except

Accepted Answer

A)   accounts payable.
B)   bonds payable.
C)   notes payable.
D)   unearned revenues.E) B) and D)
F) All of the above

Exam 10: Liabilities

Kingery Sales Company has the following selected accounts after posting adjusting entries: Instructions Prepare the current liability section of Kingery Sales Company's balance sheet, assuming $16,000 of the mortgage is payable next year.

Correct AnswerverifiedShow Answer

On September 1, Joe's Painting Service borrows $150,000 from National Bank on a 4-month, $150,000, 6% note. What entry must Joe's Painting Service make on December 31 before financial statements are prepared?

Correct AnswerverifiedShow Answer

A $1,000 face value bond with a quoted price of 98 is selling for

Correct AnswerverifiedShow Answer

Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year.

Correct AnswerverifiedShow Answer

Working capital is current assets divided by current liabilities.

Correct AnswerverifiedShow Answer

Most notes are not interest bearing.

Correct AnswerverifiedShow Answer

Each of the following accounts is reported as long-term liabilities except

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The amount of sales tax collected by a retail store when making sales is

Correct AnswerverifiedShow Answer

Premium on Bonds Payable is a contra account to Bonds Payable.

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All of the following are reported as current liabilities except

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When current liabilities are presented under IFRS, they are generally shown

Correct AnswerverifiedShow Answer

A current liability is a debt that can be expected to be paid within ______________ year or the ______________, whichever is longer.

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194. On January 1, Gage Corporation issues $1,000,000, 10-year, 12% bonds at 95 with interest payable on January 1. The carrying value of the bonds, using straight-line amortization, at the end of the third interest period is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If there is a loss on bonds redeemed early, it is

Correct AnswerverifiedShow Answer

When bonds are converted into common stock and the conversion is recorded, the ________________ of the bonds is transferred to paid-in capital accounts.

Correct AnswerverifiedShow Answer

Lark Corporation retires its $800,000 face value bonds at 104 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $829,960. The entry to record the redemption will include a

Correct AnswerverifiedShow Answer

Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1. Givens Brick Company signs a $600,000, 8%, 9-month note. What entry will Givens Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

Correct AnswerverifiedShow Answer

A legal document which summarizes the rights and privileges of bondholders as well as the obligations and commitments of the issuing company is called

Correct AnswerverifiedShow Answer

Thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is d

Correct AnswerverifiedShow Answer

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A current liability is a debt that can be expected to be paid within year or the , whichever is longer.

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