Exam 10: Liabilities

On October 1, Steve's Carpet Service borrows $350,000 from First National Bank on a 3-month, $350,000, 8% note. The entry by Steve's Carpet Service to record payment of the note and accrued interest on January 1 is

Discount on bonds is an additional cost of borrowing and should be recorded as interest expense over the life of the bonds.

222. On January 1, Greene Inc. issued $5,000,000, 9% bonds for $4,685,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Greene uses the effective-interest method of amortizing bond discount. At the end of the first year, Greene should report unamortized bond discount of

With an interest-bearing note, a borrower must pay the ________________ of the note plus _________________ at maturity.

The terms of the bond issue are set forth in a formal legal document called a bond indenture.

BE 257 On January 1, 2018, Hogan Enterprises issued 8%, 20-year bonds with a face amount of $3,000,000 at 101. Interest is payable annually on January 1. Instructions Prepare the entries to record the issuance of the bonds and the first annual interest accrual and amortization assuming that the company uses straight-line amortization.

Jim's Pharmacy has collected $600 in sales taxes during March. If sales taxes must be remitted to the state government monthly, what entry will Jim's Pharmacy make to show the March remittance?

Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.

If the market interest rate is greater than the contractual interest rate, bonds will sell

216. A bond discount must

On January 1, 2018, Carter Corporation issued $5,000,000, 10-year, 8% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2015 is

A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate.

Valerie's Salon has total receipts for the month of $20,670 including sales taxes. If the sales tax rate is 6%, what are Valerie's sales for the month?

The adjusted trial balance for Perry Corporation at the end of 2018 contained the following accounts: Instructions (a) Prepare the long-term liabilities section of the balance sheet. (b) Indicate the proper balance sheet classification for the accounts listed above that do not belong in the long-term liabilities section.

Under IFRS, companies do not use a

Howell Company has the following selected accounts after posting adjusting entries: Accounts Payable 55,000 Notes Payable, 3-month 70,000 Accumulated Depreciation-Equipment 14,000 FICA Taxes Payable 27,000 Notes Payable, 5-year, 8\% 30,000 Warranty Liability 34,000 Payroll Tax Expense 6,000 Interest Payable 3,000 Mortgage Payable 200,000 Sales Taxes Payable 16,000 Instructions Prepare the current liability section of Howell Company's balance sheet, assuming $25,000 of the mortgage is payable next year. (List liabilities in magnitude order, with largest first.)

Lucky Company borrowed $1,000,000 on December 31, 2017, by issuing $1,000,000, 8% mortgage note payable. The terms call for annual installment payments of $150,000 on December 31. Instructions (a) Prepare the journal entries to record the mortgage loan and the first two installment payments. (b) Indicate the amount of mortgage note payable to be reported as a current liability and as a long-term liability at December 31, 2019.

The higher the sales tax rate, the more profit a retailer can earn.

In the balance sheet the account Premium on Bonds Payable is

Bonds that the issuing company can redeem at a stated dollar amount prior to maturity are ________________ bonds.