Question 1

Four thousand bonds with a face value of $1,000 each, are sold at 105. The entry to record the issuance is

Accepted Answer

The answer of Four thousand bonds with a face value...

Question 2

Stockholders of a company may be reluctant to finance expansion through issuing more equity because

Accepted Answer

A)  leveraging with debt is always a better idea. 
B)  their earnings per share may decrease. 
C)  the price of the stock will automatically decrease. 
D)  dividends must be paid on a periodic basis. 
A)  leveraging with debt is always a better idea. 
B)  their earnings per share may decrease. 
C)  the price of the stock will automatically decrease. 
D)  dividends must be paid on a periodic basis.

Question 3

The debt to assets ratio is computed by dividing

Accepted Answer

A)  long-term liabilities by total assets. 
B)  total liabilities by total assets. 
C)  total assets by total liabilities. 
D)  total assets by long-term liabilities. 
A)  long-term liabilities by total assets. 
B)  total liabilities by total assets. 
C)  total assets by total liabilities. 
D)  total assets by long-term liabilities.

Question 4

The 2018 financial statements of Marker Co. contain the following selected data (in millions). $$\begin{array} { l r } 
\text { Current Assets } & \$ 75 \
\text { Total Assets } & 140 \
\text { Current Liabilities } & 40 \
\text { Total Liabilities } & 90 \
\text { Cash } & 8
\end{array}$$ The debt to assets ratio is

Accepted Answer

A)  64.3%. 
B)  53.3%. 
C)  28.6%. 
D)  147.4%. 
A)  64.3%. 
B)  53.3%. 
C)  28.6%. 
D)  147.4%.

Question 5

A current liability is a debt that can reasonably be expected to be paid

Accepted Answer

A)  within one year or the operating cycle, whichever is longer. 
B)  between 6 months and 18 months. 
C)  out of currently recognized revenues. 
D)  out of cash currently on hand. 
A)  within one year or the operating cycle, whichever is longer. 
B)  between 6 months and 18 months. 
C)  out of currently recognized revenues. 
D)  out of cash currently on hand.

Question 6

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

Accepted Answer

A)  less than face value. 
B)  equal to face value. 
C)  greater than face value. 
D)  that cannot be determined. 
A)  less than face value. 
B)  equal to face value. 
C)  greater than face value. 
D)  that cannot be determined.

Question 7

The market value (present value) of a bond is a function of all of the following except the

Accepted Answer

A)  dollar amounts to be received. 
B)  length of time until the amounts are received. 
C)  market rate of interest. 
D)  length of time until the bond is sold. 
A)  dollar amounts to be received. 
B)  length of time until the amounts are received. 
C)  market rate of interest. 
D)  length of time until the bond is sold.

Question 8

201. On January 1, Health Corporation issues $3,000,000, 10-year, 8% bonds at 96 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

Accepted Answer

A)  debit to Interest Expense, $120,000. 
B)  debit to Interest Expense, $240,000. 
C)  credit to Discount on Bonds Payable, $12,000. 
D)  credit to Discount on Bonds Payable, $24,000. 
A)  debit to Interest Expense, $120,000. 
B)  debit to Interest Expense, $240,000. 
C)  credit to Discount on Bonds Payable, $12,000. 
D)  credit to Discount on Bonds Payable, $24,000.

Question 9

A current liability is a debt the company reasonably expects to pay from existing current assets within

Accepted Answer

A)  one year. 
B)  the operating cycle. 
C)  one year or the operating cycle, whichever is longer. 
D)  one year or the operating cycle, whichever is shorter. 
A)  one year. 
B)  the operating cycle. 
C)  one year or the operating cycle, whichever is longer. 
D)  one year or the operating cycle, whichever is shorter.

Question 10

The entry to record the payment of an interest-bearing note at maturity after all interest expense has been recognized is

Accepted Answer

A)  Notes Payable Interest Payable
Cash 
B)  Notes Payable Interest Expense
Cash 
C)  Notes Payable Cash 
D)  Notes Payable Cash
Interest Payable 
A)  Notes Payable Interest Payable
Cash 
B)  Notes Payable Interest Expense
Cash 
C)  Notes Payable Cash 
D)  Notes Payable Cash
Interest Payable

Question 11

Match between columns
                        Premises: Produces a periodic interest expense that is the same amount each interest period.
A legal document that sets forth the terms of a bond issue.
Occurs when the contractual interest rate is less than the market interest rate.
A measure of a company's liquidity
Occurs when the contractual interest rate is greater than the market interest rate.
A form of interest-bearing notes payable used by corporations.
A solvency measure that indicates the percentage of assets provided by creditors.
Unsecured bonds issued against the general credit of the borrower.
A debt that can reasonably be expected to be paid from current assets.
Produces a periodic interest expense equal to a constant percentage of the carrying value of the bonds.

Accepted Answer

The Answer of Current ratio and Straight-line method of amortization is...

Question 12

Corporations are granted the power to issue bonds through

Accepted Answer

A)  tax laws. 
B)  state laws. 
C)  federal security laws. 
D)  bond debentures. 
A)  tax laws. 
B)  state laws. 
C)  federal security laws. 
D)  bond debentures.

Question 13

A note payable is in the form of

Accepted Answer

A)  a contingency that is reasonably likely to occur. 
B)  a written promissory note. 
C)  an oral agreement. 
D)  a standing agreement. 
A)  a contingency that is reasonably likely to occur. 
B)  a written promissory note. 
C)  an oral agreement. 
D)  a standing agreement.

Question 14

Ward Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2018, at 103. The journal entry to record the issuance will show a

Accepted Answer

A)  debit to Cash of $5,000,000. 
B)  credit to Premium on Bonds Payable for $150,000. 
C)  credit to Bonds Payable for $5,030,000. 
D)  credit to Cash for $5,150,000. 
A)  debit to Cash of $5,000,000. 
B)  credit to Premium on Bonds Payable for $150,000. 
C)  credit to Bonds Payable for $5,030,000. 
D)  credit to Cash for $5,150,000.

Question 15

226. Which of the following statements regarding the effective-interest method of accounting for bonds characteristics is false?

Accepted Answer

A)  GAAP always requires use of the effective interest method. 
B)  The amount of periodic interest expense decreases over the life of a discounted bond issue when the effective-interest method is used. 
C)  Over the life of the bonds, the carrying value increases for discounted bonds when using the effective-interest method. 
D)  The effective-interest method applies a constant percentage to the bond carrying value to compute interest expense. 
A)  GAAP always requires use of the effective interest method. 
B)  The amount of periodic interest expense decreases over the life of a discounted bond issue when the effective-interest method is used. 
C)  Over the life of the bonds, the carrying value increases for discounted bonds when using the effective-interest method. 
D)  The effective-interest method applies a constant percentage to the bond carrying value to compute interest expense.

Question 16

The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable:

Accepted Answer

The answer of The discount on bonds payable or premium...

Question 17

Prepare the necessary journal entries for the following transactions:
(a) On September 1, Cole Company borrowed $300,000 from National Bank on a 6-month, 8% note.
(b) On December 31, Cole Company accrued interest (assume adjusting entries are only made at the end of the year).

Accepted Answer

The answer of Prepare the necessary journal entries for the...

Question 18

Golf Pro Publications publishes a golf magazine for women. The magazine sells for $3 a copy on the newsstand. Yearly subscriptions to the magazine cost $24 per year (12 issues). During December 2017, Golf Pro Publications sells 12,000 copies of the golf magazine at newsstands and receives payment for 25,000 subscriptions for 2018. Financial statements are prepared monthly.
Instructions
(a) Prepare the December 2017 journal entries to record the newsstand sales and subscriptions received.
(b) Prepare the necessary adjusting entry on January 31, 2018. The January 2018 issue has been mailed to subscribers.

Accepted Answer

The answer of Golf Pro Publications publishes a golf magazine...

Question 19

Long-term liabilities are reported in a separate section of the balance sheet immediately following current liabilities.

Accepted Answer

A) True 
 B)False

Question 20

Fresh Corporation reports the following selected financial statement information at December 31, 2015:   Instructions
Calculate the debt to assets and times interest earned ratios.

Accepted Answer

Debt to assets: $75000 ÷ $1200

Four thousand bonds with a face value of $1,000 each, are sold at 105. The entry to record the issuance is

Stockholders of a company may be reluctant to finance expansion through issuing more equity because

The debt to assets ratio is computed by dividing

The 2018 financial statements of Marker Co. contain the following selected data (in millions). Current Assets \ 75 Total Assets 140 Current Liabilities 40 Total Liabilities 90 Cash 8 The debt to assets ratio is

A current liability is a debt that can reasonably be expected to be paid

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

The market value (present value) of a bond is a function of all of the following except the

201. On January 1, Health Corporation issues $3,000,000, 10-year, 8% bonds at 96 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

A current liability is a debt the company reasonably expects to pay from existing current assets within

The entry to record the payment of an interest-bearing note at maturity after all interest expense has been recognized is

Corporations are granted the power to issue bonds through

A note payable is in the form of

Ward Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2018, at 103. The journal entry to record the issuance will show a

226. Which of the following statements regarding the effective-interest method of accounting for bonds characteristics is false?

The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable:

Prepare the necessary journal entries for the following transactions: (a) On September 1, Cole Company borrowed $300,000 from National Bank on a 6-month, 8% note. (b) On December 31, Cole Company accrued interest (assume adjusting entries are only made at the end of the year).

Long-term liabilities are reported in a separate section of the balance sheet immediately following current liabilities.

Fresh Corporation reports the following selected financial statement information at December 31, 2015: Instructions Calculate the debt to assets and times interest earned ratios.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

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Exam 10: Liabilities

Four thousand bonds with a face value of $1,000 each, are sold at 105. The entry to record the issuance is

Stockholders of a company may be reluctant to finance expansion through issuing more equity because

The debt to assets ratio is computed by dividing

The 2018 financial statements of Marker Co. contain the following selected data (in millions). Current Assets \ 75 Total Assets 140 Current Liabilities 40 Total Liabilities 90 Cash 8 The debt to assets ratio is

A current liability is a debt that can reasonably be expected to be paid

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

The market value (present value) of a bond is a function of all of the following except the

201. On January 1, Health Corporation issues $3,000,000, 10-year, 8% bonds at 96 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a

A current liability is a debt the company reasonably expects to pay from existing current assets within

The entry to record the payment of an interest-bearing note at maturity after all interest expense has been recognized is

Corporations are granted the power to issue bonds through

A note payable is in the form of

Ward Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2018, at 103. The journal entry to record the issuance will show a

226. Which of the following statements regarding the effective-interest method of accounting for bonds characteristics is false?

The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable:

Prepare the necessary journal entries for the following transactions: (a) On September 1, Cole Company borrowed $300,000 from National Bank on a 6-month, 8% note. (b) On December 31, Cole Company accrued interest (assume adjusting entries are only made at the end of the year).

Long-term liabilities are reported in a separate section of the balance sheet immediately following current liabilities.

Fresh Corporation reports the following selected financial statement information at December 31, 2015: Instructions Calculate the debt to assets and times interest earned ratios.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters