Question 1

A note payable must always be paid before an account payable.

Accepted Answer

A) True 
 B)False

Question 2

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

Accepted Answer

A) callable bonds. 
B) early retirement bonds. 
C) options. 
D) debentures. 
A) callable bonds. 
B) early retirement bonds. 
C) options. 
D) debentures.

Question 3

Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of

Accepted Answer

A) $486,250. 
B) $485,125. 
C) $485,013. 
D) $487,500. 
A) $486,250. 
B) $485,125. 
C) $485,013. 
D) $487,500.

Question 4

Bonds that are secured by real estate are termed

Accepted Answer

A) mortgage bonds. 
B) serial bonds. 
C) debentures. 
D) convertible bonds. 
A) mortgage bonds. 
B) serial bonds. 
C) debentures. 
D) convertible bonds.

Question 5

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. Winrow Company decided to redeem the bonds on January 1, 2018. What amount of gain or loss would Winrow report on its 2018 income statement?

Accepted Answer

A) $36,800 gain 
B) $44,800 gain 
C) $44,800 loss 
D) $36,800 loss 
A) $36,800 gain 
B) $44,800 gain 
C) $44,800 loss 
D) $36,800 loss

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The adjusted trial balance for Hamilton Corp. at the end of the current year, 2017, contained the following accounts. $\begin{array}{lr}
\text { 5-year Bonds Payable } 8 \% & \$ 1,600,000 \
\text { Bond Interest Payable } & 50,000 \
\text { Premium on Bonds Payable } & 100,000 \
\text { Notes Payable (3 mo.) } & 40,000\\text { Notes Payable (5 yr.) } & 165,000 \
\text { Mortgage Payable (\$15,000 due currently) } & 200,000 \
\text { Salaries and Wages Payable } & 18,000 \
\text { Taxes Pavable (due } 3 / 15 \text { of next yr) } & 25,000
\end{array}$ The total long-term liabilities reported on the balance sheet are

Accepted Answer

A) $1,965,000 
B) $1,950,000 
C) $2,065,000 
D) $2,050,000 
A) $1,965,000 
B) $1,950,000 
C) $2,065,000 
D) $2,050,000

Question 8

Which of the following statements concerning bonds is not a true statement?

Accepted Answer

A) Bonds are generally sold through an investment company. 
B) The bond indenture is prepared after the bonds are printed. 
C) The bond indenture and bond certificate are separate documents. 
D) The trustee keeps records of each bondholder. 
A) Bonds are generally sold through an investment company. 
B) The bond indenture is prepared after the bonds are printed. 
C) The bond indenture and bond certificate are separate documents. 
D) The trustee keeps records of each bondholder.

Question 9

In a recent year Garvey Corporation had net income of $120,000, interest expense of $20,000, and income tax expense of $30,000. What was Garvey Corporation's times interest earned for the year?

Accepted Answer

A) 6.00 
B) 7.00 
C) 7.50 
D) 8.50 
A) 6.00 
B) 7.00 
C) 7.50 
D) 8.50

Question 10

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1. What is the carrying value of the bonds at the end of the third interest period?

Accepted Answer

A) $2,952,000 
B) $2,928,000 
C) $2,832,000 
D) $2,784,000 
A) $2,952,000 
B) $2,928,000 
C) $2,832,000 
D) $2,784,000

Question 11

Foley Company issued $2,000,000 of 6%, 5-year bonds at 98, which pay interest annually. Assuming straight-line amortization, what is the total interest cost of the bonds?

Accepted Answer

A) $600,000 
B) $640,000 
C) $560,000 
D) $580,000 
A) $600,000 
B) $640,000 
C) $560,000 
D) $580,000

Question 12

On October 1, Sam's Painting Service borrows $150,000 from National Bank on a 3-month, $150,000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?

Accepted Answer

The answer of On October 1, Sam's Painting Service borrows...

Question 13

Warner Company issued $5,000,000 of 6%, 10-year bonds on one of its interest dates for $4,318,500 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. What amount of discount (to the nearest dollar) should be amortized for the first interest period?

Accepted Answer

A) $140,888 
B) $68,150 
C) $90,960 
D) $45,480 
A) $140,888 
B) $68,150 
C) $90,960 
D) $45,480

Question 14

Mohling Company typically sells subscriptions on an annual basis, and publishes eight times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

Accepted Answer

The answer of Mohling Company typically sells subscriptions on an...

Question 15

The board of directors may authorize more bonds than are issued.

Accepted Answer

A) True 
 B)False

Question 16

The contractual interest rate is always equal to the market rate of interest on the date that bonds are issued.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) at a premium. 
B) at face value. 
C) at a discount. 
D) only after the stated rate of interest is increased. 
A) at a premium. 
B) at face value. 
C) at a discount. 
D) only after the stated rate of interest is increased.

Question 18

Collins Company borrowed $1,250,000 from BankTwo on January 1, 2016 in order to expand its mining capabilities. The five-year note required annual payments of $325,545 and carried an annual interest rate of 9.5%. What is the balance in the notes payable account at December 31, 2017 after the annual payment?

Accepted Answer

A) $1,250,000 
B) $816,765 
C) $1,043,205 
D) $1,012,500 
A) $1,250,000 
B) $816,765 
C) $1,043,205 
D) $1,012,500

Question 19

The contractual interest rate on a bond is often referred to as the

Accepted Answer

A) callable rate. 
B) the maturity rate. 
C) market rate. 
D) stated rate. 
A) callable rate. 
B) the maturity rate. 
C) market rate. 
D) stated rate.

Question 20

The following totals for the month of April were taken from the payroll records of Noll Company. $$\begin{array} { l r } 
\text { Salaries } & \$ 120,000 \
\text { FlCA taxes withheld } & 9,180 \
\text { Income taxes withheld } & 25,000 \
\text { Medical insurance deductions } & 4,500 \
\text { Federal unemployment taxes } & 320 \
\text { State unemployment taxes } & 2,160
\end{array}$$ The journal entry to record the monthly payroll on April 30 would include a

Accepted Answer

A) debit to Salaries and Wages Expense for $120,000. 
B) credit to Salaries and Wages Payable for $120,000. 
C) debit to Salaries and Wages Payable for $120,000. 
D) debit to Salaries and Wages Expense for $81,320. 
A) debit to Salaries and Wages Expense for $120,000. 
B) credit to Salaries and Wages Payable for $120,000. 
C) debit to Salaries and Wages Payable for $120,000. 
D) debit to Salaries and Wages Expense for $81,320.

A note payable must always be paid before an account payable.

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of

Bonds that are secured by real estate are termed

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

Which of the following statements concerning bonds is not a true statement?

In a recent year Garvey Corporation had net income of $120,000, interest expense of $20,000, and income tax expense of $30,000. What was Garvey Corporation's times interest earned for the year?

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1. What is the carrying value of the bonds at the end of the third interest period?

Foley Company issued $2,000,000 of 6%, 5-year bonds at 98, which pay interest annually. Assuming straight-line amortization, what is the total interest cost of the bonds?

On October 1, Sam's Painting Service borrows $150,000 from National Bank on a 3-month, $150,000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?

Warner Company issued $5,000,000 of 6%, 10-year bonds on one of its interest dates for $4,318,500 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. What amount of discount (to the nearest dollar) should be amortized for the first interest period?

Mohling Company typically sells subscriptions on an annual basis, and publishes eight times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

The board of directors may authorize more bonds than are issued.

The contractual interest rate is always equal to the market rate of interest on the date that bonds are issued.

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

The contractual interest rate on a bond is often referred to as the

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 9: Reporting and Analyzing Liabilities

A note payable must always be paid before an account payable.

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of

Bonds that are secured by real estate are termed

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

Which of the following statements concerning bonds is not a true statement?

In a recent year Garvey Corporation had net income of $120,000, interest expense of $20,000, and income tax expense of $30,000. What was Garvey Corporation's times interest earned for the year?

On January 1, Sewell Corporation issues $3,000,000, 5-year, 12% bonds at 96 with interest payable on January 1. What is the carrying value of the bonds at the end of the third interest period?

Foley Company issued $2,000,000 of 6%, 5-year bonds at 98, which pay interest annually. Assuming straight-line amortization, what is the total interest cost of the bonds?

On October 1, Sam's Painting Service borrows $150,000 from National Bank on a 3-month, $150,000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?

Warner Company issued $5,000,000 of 6%, 10-year bonds on one of its interest dates for $4,318,500 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. What amount of discount (to the nearest dollar) should be amortized for the first interest period?

Mohling Company typically sells subscriptions on an annual basis, and publishes eight times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

The board of directors may authorize more bonds than are issued.

The contractual interest rate is always equal to the market rate of interest on the date that bonds are issued.

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

The contractual interest rate on a bond is often referred to as the

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters