Exam 14: Long-Term Liabilities and Receivables

Barkley, Inc.sold $30, 000 of 8% bonds for $40, 200.Each $1, 000 bond carried eight rights and each right allowed the holder to acquire one share of $10 par stock for $16 a share.After the issuance of the securities, the bonds were quoted at 104 and the rights were quoted at $4 each.Later, one-half of the rights were exercised.At date of exercise, how much should be credited to Additional Paid-in Capital?

Which of the following is the best reason for the issuance of long-term liabilities?

On January 1, 2010, Aguilar Products issued $24, 000 of ten-year bonds at 98.These bonds were each convertible into ten shares of $100 par common stock.On January 1, 2017, Lee converted two-thirds of these bonds when the common stock was selling at $130 a share.What would be the loss on bond conversion? Book Value Method Market Value Method I. \ 4,896 \ 0 II. \ 5,088 \ 0 III. \ 0 \ 4,896 IV. \0 \ 5,088

On January 1, 2010, Newberg issued $200, 000 of ten-year 8% bonds at 98.These bonds were callable at 102 anytime after three years.Straight-line amortization was used.On January 1, 2014, a new bond issue was sold and the old bonds were called.What was the loss on bond retirement?

The portion of proceeds from the sale of bonds with detachable stock warrants attributable to the warrants is accounted for as a(n)

The interest rate used by the creditor to discount the future cash flows of an investment in a restructured loan is the

Bonds payable with a conversion privilege are accounted for as

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.Interest expense after the July 1, 2010, interest payment has been posted is

On April 1, 2010, the bondholders of Vick, Inc.exchanged convertible bonds for common stock.Vick's carrying amount of these bonds was less than the market value but greater than the par value of the common stock issued upon conversion.If Vick used the book value method of accounting for the conversion, which of the following occurred as a result of recording this conversion?

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 interest expense for 2011 is

Bond issue costs

Which statement is not true when a long-term note is issued for cash plus some right or privilege?

Under the straight-line amortization method, interest expense on a bond sold at a premium is equal to the

When is interest expense more than interest paid?

On January 1, 2010, Lisa Co.issued $50, 000 of 9% ten-year bonds at 98.Issuance costs amounted to $2, 000.On July 1, 2015, all of the bonds were called at 103.What was the loss on bond retirement, assuming the use of straight-line amortization?

When bonds are converted to common stock

In a troubled debt restructuring that involves only a modification of terms, if the amount to be repaid is greater than the current carrying value of the liability

Gains or losses from refunding are recognized

Exhibit 14-4 A $300, 000, ten-year, 6% bond issue was sold to yield 7% interest payable annually.Actuarial information for 10 periods is as follows: 6\% 7\% Present value of 1 .558 .508 Present value of an anmuity of 1 7.360 7.024 -Refer to Exhibit 14-4.The discount at the date of bond issuance would be