Question 1

Bonds allow a company to borrow large sums of money from many different investors.

Accepted Answer

A) True 
 B)False

Question 2

On December 1,2018,Foggy Bottom Co.borrowed $360,000 from Atlantic National Bank,and signed a 9% note payable due in one year.Interest on the note is due at maturity.
Required:
Part a.Prepare the journal entry to record the borrowing transaction.
Part b.Prepare the required adjusting entry on December 31,2018.
Part c.Prepare the journal entry to record the payment of the interest on December 1,2019.
Part d.Prepare the journal entry to record the payment of the note on December 1,2019.

Accepted Answer

Part a<br> <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> <br>...

Question 3

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.E) B) and C)
F) B) and D)

Question 4

The Big Co.issued $100,000 of bonds for their face value six years ago.This year,it retires the bonds for $105,000.As a result of retiring these bonds,it:

Accepted Answer

A)  reduces its liabilities by $105,000.
B)  reduces its assets by $100,000.
C)  reports a gain of $5,000.
D)  reports a loss of $5,000.E) None of the above
F) C) and D)

Question 5

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

Accepted Answer

A)  probable.
B)  remote.
C)  possible.
D)  likely.E) B) and C)
F) None of the above

Question 6

Which of the following statements best describes a contingent liability?

Accepted Answer

A)  The amount of a contingent liability is known and will definitely have to be paid in the future.
B)  A contingent liability is a potential liability that has arisen because of a past transaction or event,but its ultimate outcome will not be known until a future event occurs or fails to occur.
C)  A contingent liability will only be incurred if a particular future event takes place.
D)  A contingent liability is a potential liability that will be incurred if a natural disaster happens.E) A) and B)
F) None of the above

Question 7

The following data came from the financial statements of Sawyer Company:   Total Assets $369,000 Total Liabilities 171,000 Total Stockholders’ Equity 198,000 Income Tax Expense 7,200 Interest Expense 900 Net Income 117,000\begin{array}{lr}	ext { Total Assets } & \$ 369,000 \	ext { Total Liabilities } & 171,000 \	ext { Total Stockholders&#x27; Equity } & 198,000 \	ext { Income Tax Expense } & 7,200 \	ext { Interest Expense } & 900 \	ext { Net Income } & 117,000\end{array} Total Assets  Total Liabilities  Total Stockholders’ Equity  Income Tax Expense  Interest Expense  Net Income ​$369,000171,000198,0007,200900117,000​  What is the Sawyer's times interest earned ratio?

Accepted Answer

A)  130
B)  129
C)  122
D)  139 E) B) and D)
F) A) and C)

Question 8

Accrued liabilities could include all of the following except:

Accepted Answer

A)  Wages and Salaries Payable.
B)  Current Portion of Long-Term Debt.
C)  Income Tax Payable.
D)  Interest Payable.E) All of the above
F) A) and D)

Question 9

When a bond is issued at more than its face value,it is issued at:

Accepted Answer

A)  a surplus.
B)  par value.
C)  a discount.
D)  a premium.E) A) and B)
F) None of the above

Question 10

The three key pieces of information that are stated on a bond certificate are the:

Accepted Answer

A)  interest payment,the face value of the bond,and the credit rating of the company.
B)  market interest rate,the price of the bond,and the maturity date.
C)  stated interest rate,the face value of the bond,and the maturity date.
D)  interest payment,the issue price of the bond,and the credit rating of the company.E) B) and C)
F) A) and D)

Question 11

On January 1,Mallory Company issued $400,000 of 8%,5-year bonds when the market rate of interest was 6%.The bonds were issued for $433,698 and interest will be paid annually on December 31.How much premium amortization will Mallory record on the first interest payment date using the effective-interest method?

Accepted Answer

A)  $0
B)  $26,021.88
C)  $32,000
D)  $5,978.12E) A) and B)
F) B) and C)

Question 12

Match each term with the appropriate definition.Not all definitions will be used.
-Callable

Accepted Answer

A)  When a bond is issued for a price greater than its face value.
B)  Also known as the face value or par value of a bond.
C)  Rate of interest that investors demand from a bond.
D)  A bond with the feature that allows creditors to exchange the bond for company stock.
E)  The amount a company receives when it sells a bond;also known as issue price.F) The interest rate printed on the bond certificate.G) The time at which the face value of a bond must be paid to the lender.H) Is multiplied by the market interest rate to calculate the (effective) interest expense on a bond.I) A bond feature that changes the interest rate on the bond with market conditions.J) When a bond is issued for a price less than its face value.K) A bond with the feature that allows the borrowing company to pay off a bond whenever it wishes.L) A bond with the feature that lets creditors examine financial data and demand new loan conditions.M) D) and J)
N) B) and E)

Question 13

The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.

Accepted Answer

A) True 
 B)False

Question 14

Payroll deductions:

Accepted Answer

A)  are amounts added to employees' gross earnings to determine their net pay.
B)  all voluntary increase the amount of cash an employee receives.
C)  are amounts subtracted from employees' gross earnings to determine their net pay.
D)  are all accounted for as expenses.E) All of the above
F) A) and C)

Question 15

Match each term with the appropriate definition.Not all definitions will be used.
-Carrying value

Accepted Answer

A)  When a bond is issued for a price greater than its face value.
B)  Also known as the face value or par value of a bond.
C)  Rate of interest that investors demand from a bond.
D)  A bond with the feature that allows creditors to exchange the bond for company stock.
E)  The amount a company receives when it sells a bond;also known as issue price.F) The interest rate printed on the bond certificate.G) The time at which the face value of a bond must be paid to the lender.H) Is multiplied by the market interest rate to calculate the (effective) interest expense on a bond.I) A bond feature that changes the interest rate on the bond with market conditions.J) When a bond is issued for a price less than its face value.K) A bond with the feature that allows the borrowing company to pay off a bond whenever it wishes.L) A bond with the feature that lets creditors examine financial data and demand new loan conditions.M) D) and L)
N) D) and F)

Question 16

Culver,Inc.issues $250,000 of 10-year,10% bonds on January 1,2018.
Required:
Determine the amounts (bonds payable,unamortized premium or discount,and bonds payable,net)that will be reported on a balance sheet prepared as of the date of issuance of January 1,2018 under each of the following assumptions:
Part a.The bonds are sold at 100.
Part b.The bonds are sold at 104.
Part c.The bonds are sold at 98.

Accepted Answer

The answer of Culver,Inc.issues $250,000 of 10-year,10% bonds on January...

Question 17

The following information is available from the most recent financial statements of the Attaché Corporation:   Total Assets $800,000 Net Income 120,000 Average total liabilities 400,000 Sales revenue 1,500,000 Total liabilities 500,000 Average total assets 700,000\begin{array}{lr}	ext { Total Assets } & \$ 800,000 \	ext { Net Income } & 120,000 \	ext { Average total liabilities } & 400,000 \	ext { Sales revenue } & 1,500,000 \	ext { Total liabilities } & 500,000 \	ext { Average total assets } & 700,000\end{array} Total Assets  Net Income  Average total liabilities  Sales revenue  Total liabilities  Average total assets ​$800,000120,000400,0001,500,000500,000700,000​  What is the debt-to-asset ratio?

Accepted Answer

A)  57.1%
B)  62.5%
C)  160%
D)  175% E) A) and B)
F) B) and C)

Question 18

ABC Company received $9,631 for its 5-year,10% bonds with a total face value of $10,000.The market rate of interest was 11%.The bonds pay interest annually on December 31.How much interest expense will ABC Corporation record on the first annual interest payment date using the effective-interest method?

Accepted Answer

A)  $1,059.41
B)  $1,000
C)  $1,100
D)  $963.10E) A) and B)
F) A) and C)

Question 19

Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Accepted Answer

A)  $50,000.
B)  $52,000.
C)  $55,000.
D)  $57,000.E) B) and C)
F) All of the above

Question 20

Diana Olympic works 40 hours for Quartz,Inc.for $27 per hour.Required payroll deductions are: Social Security $66.96;Medicare $15.66;Federal income tax $104.40;and State income tax $18.00.The entry to record her net pay would cause which of the following to change as described?

Accepted Answer

A)  Salaries and Wages Expense increases by $1,080.
B)  Salaries and Wages Expense decreases by $1,080.
C)  Salaries and Wages Payable increases by $1,080.
D)  Salaries and Wages Payable decreases by $1,080.E) B) and C)
F) A) and B)

Exam 10: Liabilities

Diana Olympic works 40 hours for Quartz,Inc.for $27 per hour.Required payroll deductions are: Social Security $66.96;Medicare $15.66;Federal income tax $104.40;and State income tax $18.00.The entry to record her net pay would cause which of the following to change as described?

Correct Answer
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When a bond is issued at more than its face value,it is issued at:

Correct Answer
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Correct Answer
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Accrued liabilities could include all of the following except:

Correct Answer
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Payroll deductions:

Correct Answer
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The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.

Correct Answer
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Correct Answer
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Part a

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View Answer

The Big Co.issued $100,000 of bonds for their face value six years ago.This year,it retires the bonds for $105,000.As a result of retiring these bonds,it:

Correct Answer
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Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following statements best describes a contingent liability?

Correct Answer
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Match each term with the appropriate definition.Not all definitions will be used. -Callable

Correct Answer
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Bonds allow a company to borrow large sums of money from many different investors.

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

Correct Answer
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Match each term with the appropriate definition.Not all definitions will be used. -Carrying value

Correct Answer
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The discount on a bonds payable becomes:

Correct Answer
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The three key pieces of information that are stated on a bond certificate are the:

Correct Answer
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Exam 10: Liabilities

Diana Olympic works 40 hours for Quartz,Inc.for $27 per hour.Required payroll deductions are: Social Security $66.96;Medicare $15.66;Federal income tax $104.40;and State income tax $18.00.The entry to record her net pay would cause which of the following to change as described?

Correct AnswerverifiedShow Answer

When a bond is issued at more than its face value,it is issued at:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Accrued liabilities could include all of the following except:

Correct AnswerverifiedShow Answer

Payroll deductions:

Correct AnswerverifiedShow Answer

The debt-to-assets ratio indicates financing risk by computing the proportion of total assets financed by debt.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedPart a ...View AnswerShow Answer

The Big Co.issued $100,000 of bonds for their face value six years ago.This year,it retires the bonds for $105,000.As a result of retiring these bonds,it:

Correct AnswerverifiedShow Answer

Your company sells $50,000 of one-year,10% bonds for an issue price of $52,000.The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements best describes a contingent liability?

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -Callable

Correct AnswerverifiedShow Answer

Bonds allow a company to borrow large sums of money from many different investors.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -Carrying value

Correct AnswerverifiedShow Answer

The discount on a bonds payable becomes:

Correct AnswerverifiedShow Answer

The three key pieces of information that are stated on a bond certificate are the:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Part a

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View Answer

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