Exam 9: Reporting and Analyzing Liabilities

In a recent year Hart Corporation had net income of $155,000, interest expense of $30,000, and income tax expense of $40,000. What was Hart Corporation's times interest earned for the year?

Al's Bookstore has collected $950 in sales taxes during April. If sales taxes must be remitted to the state government monthly, what entry will Al's Bookstore make to show the April remittance?

Sales taxes collected by a retailer are reported as

Each bondholder may vote for the board of directors in proportion to the number of bonds held.

Stockholders of a company may be reluctant to finance expansion through issuing more equity because

The calculation of interest to be paid each interest period in connection with a bond payable is not influenced by any premium or discount upon issuance.

Secured bonds are bonds that

Bonds with a face value of $600,000 and a quoted price of 98½ have a selling price of

If $500,000 par value bonds with a carrying value of $476,000 are redeemed at 97, a loss on redemption will be recorded.

Over the term of the bonds, the balance in the Discount on Bonds Payable account will

Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.

The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the

Which of the following statements regarding the effective interest method of accounting for bonds is false?

The 2017 financial statements of Harper Co. contain the following selected data (in millions). Current assets \ 90 Total assets 160 Current liabilities 45 Total liabilities 72 Cash 8 Interest expense 5 Income taxes 10 Net income 16 The debt to assets ratio is

Neither corporate bond interest nor dividends are deductible for tax purposes.

The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account.

If bonds are issued at a discount, it means that the

If a bond has a stated value of $1,000 and a contractual interest rate of 6 percent, then the interest paid annually will be $60.

Don's Pharmacy has collected $900 in sales taxes during March. If sales taxes must be remitted to the state government monthly, what entry will Don's Pharmacy make to show the March remittance?

As interest is recorded on an interest-bearing note, the Interest Expense account is