Question 1

FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions.

Accepted Answer

A) True 
 B)False

Question 2

Townson Co. has outstanding $100 million of 7% bonds, due in 7 years, and callable at 104. The bonds were issued at par and are selling today at a market price of 94. If Townson Co. calls $20 million of these bonds it will report:

Accepted Answer

A)  A $1,400,000 gain. 
B)  A $800,000 loss. 
C)  An unrealized gain. 
D)  Neither gains nor losses are recognized on early retirements of debt. 
A)  A $1,400,000 gain. 
B)  A $800,000 loss. 
C)  An unrealized gain. 
D)  Neither gains nor losses are recognized on early retirements of debt.

Question 3

The interest charged on a $400,000, 90-day note payable, at the rate of 8%, would be

Accepted Answer

A)  $32,000. 
B)  $17,776. 
C)  $8,000. 
D)  $2,666. 
A)  $32,000. 
B)  $17,776. 
C)  $8,000. 
D)  $2,666.

Question 4

Julie's Boutique has total receipts for the month of $31,920 including sales taxes. If the sales tax rate is 5%, what are Julie's sales for the month?

Accepted Answer

A)  $30,324 
B)  $30,400 
C)  $33,516 
D)  It cannot be determined. 
A)  $30,324 
B)  $30,400 
C)  $33,516 
D)  It cannot be determined.

Question 5

The times interest earned ratio is computed by dividing net income by interest expense.

Accepted Answer

A) True 
 B)False

Question 6

On March 1, Jordan Company borrows $240,000 from Ottawa State Bank by signing a 6-month, 8%, interest-bearing note.
Instructions
Prepare the necessary entries below associated with the note payable on the books of Jordan 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 semi-annual financial statements. Assume no other interest accrual entries have been made.
(c) Prepare the adjusting entry at August 31 to accrue interest.
(d) Prepare the entry to record payment of the note at maturity.

Accepted Answer

The answer of On March 1, Jordan Company borrows $240,000...

Question 7

Working capital is

Accepted Answer

A)  current assets plus current liabilities. 
B)  current assets minus current liabilities. 
C)  current assets divided by current liabilities. 
D)  current assets multiplied by current liabilities. 
A)  current assets plus current liabilities. 
B)  current assets minus current liabilities. 
C)  current assets divided by current liabilities. 
D)  current assets multiplied by current liabilities.

Question 8

The current carrying value of Kane's $800,000 face value bonds is $797,000. If the bonds are retired at 103, what would be the amount Kane would pay its bondholders?

Accepted Answer

A)  $797,000 
B)  $800,000 
C)  $820,910 
D)  $824,000 
A)  $797,000 
B)  $800,000 
C)  $820,910 
D)  $824,000

Question 9

Obligations in written form are called ______________ and usually require the borrower to pay interest.

Accepted Answer

The answer of Obligations in written form are called ______________...

Question 10

The entry to record the proceeds upon issuing an interest-bearing note is

Accepted Answer

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

Question 11

A cash register tape shows cash sales of $3,500 and sales taxes of $210. The journal entry to record this information is

Accepted Answer

The answer of A cash register tape shows cash sales...

Question 12

Beonce Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2016. The bonds had a face value of $200,000, pay interest annually on January 1, and have a call price of 101. Beonce uses the straight-line method of amortization. Beonce Company decided to redeem the bonds on January 1, 2018. What amount of gain or loss would Beonce report on its 2018 income statement?

Accepted Answer

A)  $9,600 gain 
B)  $11,600 gain 
C)  $11,600 loss 
D)  $9,600 loss 
A)  $9,600 gain 
B)  $11,600 gain 
C)  $11,600 loss 
D)  $9,600 loss

Question 13

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

Accepted Answer

A) True 
 B)False

Question 14

From a liquidity standpoint, it is more desirable for a company to have current

Accepted Answer

A)  assets equal current liabilities. 
B)  liabilities exceed current assets. 
C)  assets exceed current liabilities. 
D)  liabilities exceed long-term liabilities. 
A)  assets equal current liabilities. 
B)  liabilities exceed current assets. 
C)  assets exceed current liabilities. 
D)  liabilities exceed long-term liabilities.

Question 15

220. Silk Company issued $500,000 of 7%, 10-year bonds on its interest date for $431,850 to yield an effective annual rate of 9%. The effective-interest method of amortization is to be used. Interest is paid annually. The journal entry on the first interest payment date, to record the payment of interest and amortization of discount will include a

Accepted Answer

A)  debit to Interest Expense for $35,000. 
B)  credit to Cash for $38,867. 
C)  credit to Discount on Bonds Payable for $3,867. 
D)  debit to Interest Expense for $45,000. 
A)  debit to Interest Expense for $35,000. 
B)  credit to Cash for $38,867. 
C)  credit to Discount on Bonds Payable for $3,867. 
D)  debit to Interest Expense for $45,000.

Question 16

Hilton Company issued a four-year interest-bearing note payable for $600,000 on January 1, 2017. Each January the company is required to pay $150,000 on the note. How will this note be reported on the December 31, 2018 balance sheet?

Accepted Answer

A)  Long-term debt, $600,000. 
B)  Long-term debt, $450,000. 
C)  Long-term debt, $300,000; Long-term debt due within one year, $150,000. 
D)  Long-term debt, $450,000; Long-term debt due within one year, $150,000. 
A)  Long-term debt, $600,000. 
B)  Long-term debt, $450,000. 
C)  Long-term debt, $300,000; Long-term debt due within one year, $150,000. 
D)  Long-term debt, $450,000; Long-term debt due within one year, $150,000.

Question 17

Which of the following statements concerning current liabilities is incorrect?

Accepted Answer

A)  Current liabilities include unearned revenues. 
B)  A company that has more current liabilities than current assets is usually the subject of some concern. 
C)  Current liabilities include prepaid expenses. 
D)  A current liability is a debt that can reasonably be expected to be paid out of existing current assets or result in the creation of other current liabilities. 
A)  Current liabilities include unearned revenues. 
B)  A company that has more current liabilities than current assets is usually the subject of some concern. 
C)  Current liabilities include prepaid expenses. 
D)  A current liability is a debt that can reasonably be expected to be paid out of existing current assets or result in the creation of other current liabilities.

Question 18

The interest rate investors demand for loaning funds is the

Accepted Answer

A)  market interest rate. 
B)  stated rate. 
C)  contractual interest rate. 
D)  bond interest rate. 
A)  market interest rate. 
B)  stated rate. 
C)  contractual interest rate. 
D)  bond interest rate.

Question 19

The current ratio is

Accepted Answer

A)  current assets plus current liabilities. 
B)  current assets minus current liabilities. 
C)  current assets divided by current liabilities. 
D)  current assets multiplied by current liabilities. 
A)  current assets plus current liabilities. 
B)  current assets minus current liabilities. 
C)  current assets divided by current liabilities. 
D)  current assets multiplied by current liabilities.

Question 20

Putman Company had cash sales of $75,950 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale.

Accepted Answer

The answer of Putman Company had cash sales of $75,950...

FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions.

Townson Co. has outstanding $100 million of 7% bonds, due in 7 years, and callable at 104. The bonds were issued at par and are selling today at a market price of 94. If Townson Co. calls $20 million of these bonds it will report:

The interest charged on a $400,000, 90-day note payable, at the rate of 8%, would be

Julie's Boutique has total receipts for the month of $31,920 including sales taxes. If the sales tax rate is 5%, what are Julie's sales for the month?

The times interest earned ratio is computed by dividing net income by interest expense.

Working capital is

The current carrying value of Kane's $800,000 face value bonds is $797,000. If the bonds are retired at 103, what would be the amount Kane would pay its bondholders?

Obligations in written form are called ______________ and usually require the borrower to pay interest.

The entry to record the proceeds upon issuing an interest-bearing note is

A cash register tape shows cash sales of $3,500 and sales taxes of $210. The journal entry to record this information is

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

From a liquidity standpoint, it is more desirable for a company to have current

Hilton Company issued a four-year interest-bearing note payable for $600,000 on January 1, 2017. Each January the company is required to pay $150,000 on the note. How will this note be reported on the December 31, 2018 balance sheet?

Which of the following statements concerning current liabilities is incorrect?

The interest rate investors demand for loaning funds is the

The current ratio is

Putman Company had cash sales of $75,950 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale.

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

FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions.

Townson Co. has outstanding $100 million of 7% bonds, due in 7 years, and callable at 104. The bonds were issued at par and are selling today at a market price of 94. If Townson Co. calls $20 million of these bonds it will report:

The interest charged on a $400,000, 90-day note payable, at the rate of 8%, would be

Julie's Boutique has total receipts for the month of $31,920 including sales taxes. If the sales tax rate is 5%, what are Julie's sales for the month?

The times interest earned ratio is computed by dividing net income by interest expense.

Working capital is

The current carrying value of Kane's $800,000 face value bonds is $797,000. If the bonds are retired at 103, what would be the amount Kane would pay its bondholders?

Obligations in written form are called ______________ and usually require the borrower to pay interest.

The entry to record the proceeds upon issuing an interest-bearing note is

A cash register tape shows cash sales of $3,500 and sales taxes of $210. The journal entry to record this information is

If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

From a liquidity standpoint, it is more desirable for a company to have current

Hilton Company issued a four-year interest-bearing note payable for $600,000 on January 1, 2017. Each January the company is required to pay $150,000 on the note. How will this note be reported on the December 31, 2018 balance sheet?

Which of the following statements concerning current liabilities is incorrect?

The interest rate investors demand for loaning funds is the

The current ratio is

Putman Company had cash sales of $75,950 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale.

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