Exam 9: Reporting and Analyzing Liabilities

A corporation issues $300,000, 10%, 5-year bonds on January 1, 2017, for $287,400. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2017's adjusting entry is

Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30?

The following totals for the month of April were taken from the payroll records of Metz Company. Salaries \ 90,000 FlCA taxes withheld 6,885 Income taxes withheld 19,800 Medical insurance deductions 3,600 Federal unemployment taxes 720 State unemployment taxes 4,500 The entry to record accrual of employer's payroll taxes would include a

Interest expense on an interest-bearing note is

When bonds are issued at a premium, the total interest cost of the bonds over the life of the bonds is equal to the amount of

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $294,000, what is the amount of the sales taxes owed to the taxing agency?

Notes payable are often used instead of accounts payable.

Winrow Company received proceeds of $754,000 on 10-year, 8% bonds issued on January 1, 2016. The bonds had a face value of $800,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the amount of interest Winrow must pay the bondholders in 2016?

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $630,000, what is the amount of the sales taxes owed to the taxing agency?

If the market rate of interest is lower than the contractual interest rate, the bonds will sell at

Generally, convertible bonds do not pay interest.

Five thousand bonds with a face value of $1,000 each, are sold at 97. The entry to record the issuance is

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

If bonds have been issued at a discount, then over the life of the bonds the

Bond discount should be amortized to comply with

On October 1, Sam's Painting Service borrows $150,000 from National Bank on a 3-month, $150,000, 4% note. The entry by Sam's Painting Service to record payment of the note and accrued interest on January 1 is

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

Wolford Company borrowed $2,000,000 from U.S. Bank on January 1, 2016 in order to expand its mining capabilities. The five-year note required annual payments of $520,872 and carried an annual interest rate of 9.5%. What is the amount of expense Wolford must recognize on its 2017 income statement?

An unsecured bond is one that is issued against the general credit of the borrower.

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