Exam 14: Long-Term Liabilities and Receivables

Exhibit 14-10 Elaine, Inc.issued a seven-year non-interest-bearing note with a face value of $20, 000 and received $11, 670.Actuarial information for seven periods is as follows: -Refer to Exhibit 14-10.The implied interest rate is

The journal entry to recognize the impairment of a note receivable includes a

On April 1, 2010, Everly Corporation issued 8% debentures dated January 1, 2010.The debentures had a face value of $3, 000, 000 and interest was payable on January 1 and July 1.The debentures were sold at par plus accrued interest.To record this event on April 1, 2010, Everly should debit cash for

Exhibit 14-2 Mara Corporation issued $400, 000 of its 6%, 10-year bonds, dated January 1, 2010, at face value plus accrued interest on April 1, 2010.Interest is paid on January 1 and July 1.Mara uses the most common method to record the sale of the bonds between interest payment periods. - Refer to Exhibit 14-2.The entry to record the sale would include a

The entry to record interest revenue on an impaired note receivable is computed each period by multiplying the

Exhibit 14-13 On January 1, 2010, Marty Co.issued $80, 000 of serial bonds that pay 9% interest annually.Each December 31, $16, 000 of the bonds comes due.The bonds were issued for $84, 800. - Refer to Exhibit 14-13.If the bonds outstanding method is in use, what would be the total amount of interest expense for 2012?

Exhibit 14-11 Hernandez, Ltd.issued a three-year, $100, 000, non-interest-bearing note to a customer on January 1, 2010.Hernandez also agrees to sell inventory to the customer at reduced rates over a five-year period.Hernandez's incremental interest rate is 10%, and the present value of the note is $75, 132. - Refer to Exhibit 14-11.Hernandez's sales revenue connected with the note in 2010 is

Which of the following statements is not true?

Exhibit 14-8 Marvin Corp.issued $500, 000 of its ten-year 6% bonds at 104.Each $1, 000 bond carries ten warrants.Each warrant allows the holder to purchase one share of $10 par common stock for $50.Following the sale, relevant market values were: Bonds \ 980 (ex rights) Warrants \ 14 each Common stock \ 60 each -Refer to Exhibit 14-8.After a total of 2, 000 warrants were exercised, the remaining warrants expired.The entry to record the expiration of the warrants would include a credit to Additional Paid-in Capital from Expired Warrants for

The bond interest expense reflected on the income statement should reflect an amount based on the

In June 2010, Gross Corporation issued a three-year non-interest-bearing note with a face value of $15, 000 and received cash of $11, 025.00 in exchange.The difference between the face value and the cash proceeds is accounted for as

The proper procedure for computing the issuance price of a bond includes adding the

A note receivable is considered impaired when

Exhibit 14-3 Nazzi, Inc.sold $400, 000 of its 9%, five-year bonds dated January 1, 2010, on May 1, 2010, for $393, 000 plus accrued interest.Interest is paid on January 1 and July 1 and straight-line amortization is used. - Refer to Exhibit 14-3.The balance of Discount on Bonds Payable after the December 31, 2010, adjusting entry has been posted would be

The bonds outstanding method of amortizing a discount on serial bonds

The creditor of a restructured loan calculates interest revenues during the periods after restructuring based on the

On July 1, 2010, Navarre Corporation issued bonds with a face value of $100, 000 and 12% interest payable semiannually.The bonds mature on June 30, 2015.The market rate of interest at the time of issuance was 14%, so the bonds were issued at a discount of $7, 054.Using the effective interest method, the amount of discount that should be amortized by Navarre on December 31, 2010, is

Exhibit 14-6 Alpha, Inc.issued $100, 000 of its 7% five-year bonds on January 1, 2010, at 98.Interest is paid on January 1 and July 1.The bonds are callable at 103 and straight-line amortization is used.The bonds are recalled on April 1, 2012. - Refer to Exhibit 14-6.The journal entry to record the reacquisition of the bonds will include a

Exhibit 14-8 Marvin Corp.issued $500, 000 of its ten-year 6% bonds at 104.Each $1, 000 bond carries ten warrants.Each warrant allows the holder to purchase one share of $10 par common stock for $50.Following the sale, relevant market values were: Bonds \ 980 (ex rights) Warrants \ 14 each Common stock \ 60 each -Refer to Exhibit 14-8.The entry to record the exercise of 1, 000 warrants would include a

Bond issue costs are reported on the financial statements as