Question 1

The present value of a $10,000, 5-year bond, will be less than $10,000 if the

Accepted Answer

A) contractual rate of interest is less than the market rate of interest. 
B) contractual rate of interest is greater than the market rate of interest. 
C) bond is convertible. 
D) contractual rate of interest is equal to the market rate of interest. 
A) contractual rate of interest is less than the market rate of interest. 
B) contractual rate of interest is greater than the market rate of interest. 
C) bond is convertible. 
D) contractual rate of interest is equal to the market rate of interest.

Question 2

If bonds are originally sold at a discount using the straight-line amortization method

Accepted Answer

A) interest expense in the earlier years of the bond's life will be less that the interest to be paid. 
B) interest expense in the earlier years of the bond's life will be the same as interest to be paid. 
C) unamortized discount is subtracted from the face value of the bond to determine its carrying value. 
D) unamortized discount is added to the face value of the bond to determine its carrying value. 
A) interest expense in the earlier years of the bond's life will be less that the interest to be paid. 
B) interest expense in the earlier years of the bond's life will be the same as interest to be paid. 
C) unamortized discount is subtracted from the face value of the bond to determine its carrying value. 
D) unamortized discount is added to the face value of the bond to determine its carrying value.

Question 3

Gomez Corporation issues 900, 10-year, 8%, $1,000 bonds dated January 1, 2017, at 96. The journal entry to record the issuance will show a

Accepted Answer

A) debit to Cash of $900,000. 
B) credit to Discount on Bonds Payable for $36,000. 
C) credit to Bonds Payable for $864,000. 
D) debit to Cash for $864,000. 
A) debit to Cash of $900,000. 
B) credit to Discount on Bonds Payable for $36,000. 
C) credit to Bonds Payable for $864,000. 
D) debit to Cash for $864,000.

Question 4

The following totals for the month of March were taken from the payroll records of Kern Company. $$\begin{array} { l r } 
\text { Salaries } & \$ 270,000 \
\text { FlCA taxes withheld } & 20,655 \
\text { Income taxes withheld } & 59,400 \
\text { Medical insurance deductions } & 3,915 \
\text { Federal unemployment taxes } & 2,160 \
\text { State unemployment taxes } & 13,500
\end{array}$$ The journal entry to record the monthly payroll on March 30 would include a

Accepted Answer

A) debit to Salaries and Wages Payable for $170,370. 
B) debit to Salaries and Wages Payable for $186,030. 
C) debit to Salaries and Wages Expense for $270,000. 
D) debit to Salaries and Wages Expense for $170,370. 
A) debit to Salaries and Wages Payable for $170,370. 
B) debit to Salaries and Wages Payable for $186,030. 
C) debit to Salaries and Wages Expense for $270,000. 
D) debit to Salaries and Wages Expense for $170,370.

Question 5

Which of the following most likely would be classified as a current liability?

Accepted Answer

A) Dividends payable 
B) Bonds payable in 5 years 
C) Three-year notes payable 
D) Mortgage payable as a single payment in 10 years 
A) Dividends payable 
B) Bonds payable in 5 years 
C) Three-year notes payable 
D) Mortgage payable as a single payment in 10 years

Question 6

The interest charged on a $90,000 note payable, at the rate of 6%, on a 60-day note would be

Accepted Answer

A) $5,400. 
B) $2,700. 
C) $1,350. 
D) $900. 
A) $5,400. 
B) $2,700. 
C) $1,350. 
D) $900.

Question 7

The amortization of a bond premium will result in reporting an amount of interest expense for an interest period that

Accepted Answer

A) is less than the amount of cash to be paid for interest for the period. 
B) exceeds the amount of cash to be paid for interest for the period. 
C) equals the amount of cash to be paid for interest for the period. 
D) has no predictable relationship with the amount of cash to be paid for interest for the period. 
A) is less than the amount of cash to be paid for interest for the period. 
B) exceeds the amount of cash to be paid for interest for the period. 
C) equals the amount of cash to be paid for interest for the period. 
D) has no predictable relationship with the amount of cash to be paid for interest for the period.

Question 8

Bonds with a face value of $500,000 and a quoted price of 102¼ have a selling price of

Accepted Answer

A) $601,125. 
B) $510,125. 
C) $510,013. 
D) $511,250. 
A) $601,125. 
B) $510,125. 
C) $510,013. 
D) $511,250.

Question 9

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 entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

Accepted Answer

The answer of Moss County Bank agrees to lend the...

Question 10

Sparks Company received proceeds of $634,500 on 10-year, 8% bonds issued on January 1, 2016. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. What is the carrying value of the bonds on January 1, 2018?

Accepted Answer

A) $600,000 
B) $627,600 
C) $572,400 
D) $631,050 
A) $600,000 
B) $627,600 
C) $572,400 
D) $631,050

Question 11

The market rate of interest is often called the

Accepted Answer

A) stated rate. 
B) effective rate. 
C) coupon rate. 
D) contractual rate. 
A) stated rate. 
B) effective rate. 
C) coupon rate. 
D) contractual rate.

Question 12

Oliver Company issued $2,000,000 of 6%, 5-year bonds at 98. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

Accepted Answer

A) $120,000 
B) $60,000 
C) $124,000 
D) $128,000 
A) $120,000 
B) $60,000 
C) $124,000 
D) $128,000

Question 13

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments added to the premium.

Accepted Answer

A) True 
 B)False

Question 14

Fornelli Corporation borrowed $800,000 from Central Bank on May 31, 2016. The three-year, 7% note required annual payments of $304,840 beginning May 31, 2017. The total amount of interest to be paid over the life of the loan is

Accepted Answer

A) $56,000. 
B) $114,520. 
C) $223,470. 
D) $168,000. 
A) $56,000. 
B) $114,520. 
C) $223,470. 
D) $168,000.

Question 15

The following totals for the month of March were taken from the payroll records of Kern Company. $$\begin{array} { l r } 
\text { Salaries } & \$ 270,000 \
\text { FlCA taxes withheld } & 20,655 \
\text { Income taxes withheld } & 59,400 \
\text { Medical insurance deductions } & 3,915 \
\text { Federal unemployment taxes } & 2,160 \
\text { State unemployment taxes } & 13,500
\end{array}$$ The entry to record the payment of net payroll would include a

Accepted Answer

A) debit to Salaries and Wages Expense for $170,370. 
B) debit to Salaries and Wages Payable for $186,030. 
C) debit to Salaries and Wages Payable for $170,370. 
D) credit to Cash for $170,370. 
A) debit to Salaries and Wages Expense for $170,370. 
B) debit to Salaries and Wages Payable for $186,030. 
C) debit to Salaries and Wages Payable for $170,370. 
D) credit to Cash for $170,370.

Question 16

Herman Company received proceeds of ₤471,250 on 10-year, 8% bonds issued on January 1, 2015. The bonds had a face value of ₤500,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Herman uses the straight-line method of amortization.
Herman Company decided to redeem the bonds on January 1, 2017. What amount of gain or loss would Herman report on its 2017 income statement?

Accepted Answer

A) ₤23,000 gain 
B) ₤28,000 gain 
C) ₤28,000 loss 
D) ₤23,000 loss 
A) ₤23,000 gain 
B) ₤28,000 gain 
C) ₤28,000 loss 
D) ₤23,000 loss

Question 17

Most notes are not interest bearing.

Accepted Answer

A) True 
 B)False

Question 18

The face value is the amount of principal and interest due at the maturity date.

Accepted Answer

A) True 
 B)False

Question 19

With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.

Accepted Answer

A) True 
 B)False

Question 20

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) maturity date. 
C) market interest rate. 
D) type of bonds. 
A) dollar amounts to be received. 
B) maturity date. 
C) market interest rate. 
D) type of bonds.

The present value of a $10,000, 5-year bond, will be less than $10,000 if the

If bonds are originally sold at a discount using the straight-line amortization method

Gomez Corporation issues 900, 10-year, 8%, $1,000 bonds dated January 1, 2017, at 96. The journal entry to record the issuance will show a

Which of the following most likely would be classified as a current liability?

The interest charged on a $90,000 note payable, at the rate of 6%, on a 60-day note would be

The amortization of a bond premium will result in reporting an amount of interest expense for an interest period that

Bonds with a face value of $500,000 and a quoted price of 102¼ have a selling price of

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 entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

The market rate of interest is often called the

Oliver Company issued $2,000,000 of 6%, 5-year bonds at 98. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments added to the premium.

Fornelli Corporation borrowed $800,000 from Central Bank on May 31, 2016. The three-year, 7% note required annual payments of $304,840 beginning May 31, 2017. The total amount of interest to be paid over the life of the loan is

Most notes are not interest bearing.

The face value is the amount of principal and interest due at the maturity date.

With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.

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

The present value of a $10,000, 5-year bond, will be less than $10,000 if the

If bonds are originally sold at a discount using the straight-line amortization method

Gomez Corporation issues 900, 10-year, 8%, $1,000 bonds dated January 1, 2017, at 96. The journal entry to record the issuance will show a

Which of the following most likely would be classified as a current liability?

The interest charged on a $90,000 note payable, at the rate of 6%, on a 60-day note would be

The amortization of a bond premium will result in reporting an amount of interest expense for an interest period that

Bonds with a face value of $500,000 and a quoted price of 102¼ have a selling price of

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 entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

The market rate of interest is often called the

Oliver Company issued $2,000,000 of 6%, 5-year bonds at 98. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments added to the premium.

Fornelli Corporation borrowed $800,000 from Central Bank on May 31, 2016. The three-year, 7% note required annual payments of $304,840 beginning May 31, 2017. The total amount of interest to be paid over the life of the loan is

Most notes are not interest bearing.

The face value is the amount of principal and interest due at the maturity date.

With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.

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