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Exam 10: Reporting and Analyzing Liabilities

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Question 61

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Unearned Rent Revenue is

A) a contra account to Rent Revenue.
B) a revenue account.
C) reported as a current liability.
D) debited when rent is received in advance.

E) All of the above
F) None of the above

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Question 62

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Most companies pay current liabilities

A) out of current assets.
B) by issuing interest-bearing notes payable.
C) by issuing stock.
D) by creating long-term liabilities.

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

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Question 63

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The following totals for the month of March were taken from the payroll records of Kern Company. The entry to record accrual of employer's payroll taxes would include a

Collins Company borrowed $750,000 from BankTwo on January 1, 2013 in order to expand its mining capabilities. The five-year note required annual payments of $195,327 and carried an annual interest rate of 9.5%. What is the balance in the notes payable account at December 31, 2014? A) $750,000 B) $490,059 C) $625,923 D) $607,500

If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date.

Bond discount should be amortized to comply with

The present value of a bond is also known as its

On June 1, Huntley Company borrows $50,000 from the bank by signing a 60-day, 6%, interest-bearing note. Instructions Prepare the necessary entries below associated with the note payable on the books of Huntley Company. (a) Prepare the entry on June 1 when the note was issued. (b) Prepare any adjusting entries necessary on June 30 in order to prepare the monthly financial statements. Assume no other interest accrual entries have been made. (c) Prepare the entry to record payment of the note at maturity.

The face value is the amount of principal and interest due at the maturity date.

An installment note calling for equal total payments each period will result in a principal portion that decreases in each successive period.

If bonds are issued at a discount, it means that the

Sales taxes collected by a retailer are recorded by

Hogan Company has $1,000,000 of bonds outstanding. The unamortized premium is $14,400. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

Corporations are granted the power to issue bonds through

If bonds are issued at a premium, the stated interest rate is

Wittebury Corporation retires its £3,000,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $3,112,350. The entry to record the redemption will include

On March 1, Cooper Company borrows $80,000 from New National Bank by signing a 6-month, 6%, interest-bearing note. Instructions Prepare the necessary entries below associated with the note payable on the books of Cooper Company. (a) Prepare the entry on March 1 when the note was issued. (b) Prepare any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other interest accrual entries have been made. (c) Prepare the entry to record payment of the note at maturity.

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount

The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account.

Very often, failure to record a liability means failure to record a(n)