Exam 9: Reporting and Analyzing Liabilities

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 amount of interest expense Sparks will show with relation to these bonds for the year ended December 31, 2017?

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2016. The three-year, 7% note required annual payments of $571,575 beginning May 31, 2017. The total amount of interest to be paid over the life of the loan is

On January 1, Thompson Corporation issued $4,000,000, 14%, 5-year bonds with interest payable on December 31. The bonds sold for $4,288,384. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

If $150,000 face value bonds are issued at 102, the proceeds received will be $102,000.

Metropolitan Symphony sells 200 season tickets for $40,000 that includes a five-concert season. The amount of Unearned Ticket Revenue after the third concert is $24,000.

Larson Company issued $1,000,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment point?

Selling the bonds at a premium has the effect of

In the balance sheet, the account Premium on Bonds Payable is

In a recent year Ley Corporation had net income of $150,000, interest expense of $30,000, and a times interest earned ratio of 7. What was Ley Corporation's income before taxes for the year?

In the balance sheet, the account Discount on Bonds Payable is

Wittebury Corporation retires its £3,000,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $3,112,350. The entry to record the redemption will include

Corporations are granted the power to issue bonds through

Yanik Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2017, at 97. The journal entry to record the issuance will show a

A $900,000 bond was retired at 103 when the carrying value of the bond was $933,000. The entry to record the retirement would include a

The debt to assets ratio measures the percentage of the total assets provided by creditors.

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 amount of expense Collins must recognize on its 2017 income statement?

The current market value of a bond is equal to the present value of all future cash payments promised by the bond.

If $180,000, 6%, bonds are issued on January 1, and pay interest annually, the amount of interest paid will be $10,800.

Morgan Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $38,160. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes?

Interest expense is reported under Other Expenses and Losses in the income statement.