Exam 10: Liabilities

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?

Hernandez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2015, at 98. The journal entry to record the issuance will show a

Which of the following is not an advantage of issuing bonds instead of common stock?

Notes payable usually require the borrower to pay interest.

Notes payable are often used instead of accounts payable.

Employee payroll deductions include each of the following except

A corporation recognizes a gain or loss

A current liability must be paid out of current earnings.

The current ratio is

Any balance in an unearned revenue account is reported as a(n)

A corporation issues $500,000, 8%, 5-year bonds on January 1, 2015, for $479,000. 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, 2015's adjusting entry is

A current liability is a debt the company reasonably expects to pay from existing current assets within

203. Either the straight-line method or the effective-interest method of amortization will always result in

On October 1, 2014, Pennington Company issued a $90,000, 10%, nine-month interest-bearing note. Assuming interest was accrued in June 30, 2015, the entry to record the payment of the note on July 1, 2015, will include a:

When authorizing bonds to be issued, the board of directors does not specify the

Which one of the following payroll taxes does not result in a payroll tax expense for the employer?

Winter Company purchased a building on January 2 by signing a long-term $630,000 mortgage with monthly payments of $5,400. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

A $600,000 bond was retired at 98 when the carrying value of the bond was $590,000. The entry to record the retirement would include a

209. Silk Company issued $500,000 of 7%, 10-year bonds on one of its interest dates for $431,850 to yield an effective annual rate of 9%. The effective-interest method of amortization is to be used. Interest is paid annually. The journal entry on the first interest payment date, to record the payment of interest and amortization of discount will include a

248. The market price of a bond is the