Exam 10: Liabilities

During the month, a company sells goods for a total of $108,000, which includes sales taxes of $8,000; therefore, the company should recognize $100,000 in Sales Revenues and $8,000 in Sales Tax Expense.

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

202. $4 million, 8%, 10-year bonds are issued at face value. Interest will be paid semi-annually. When calculating the market price of the bond, the present value of

On January 1, 2015, $2,000,000, 10-year, 10% bonds, were issued for $1,946,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is

226. Stable Company issued $500,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the total interest cost of the bonds?

Bonds that the issuing company can redeem at a stated dollar amount prior to maturity are convertible bonds.

When bonds are converted into common stock,

The following exhibit is for Kmart bonds. The contractual interest rate of the K mart bonds is

Townson Co. has outstanding $100 million of 7% bonds, due in 7 years, and callable at 104. The bonds were issued at par and are selling today at a market price of 94. If Townson Co. calls $20 million of these bonds it will report:

211. On January 1, Greene Inc. issued $5,000,000, 9% bonds for $4,685,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Greene uses the effective-interest method of amortizing bond discount. At the end of the first year, Greene should report unamortized bond discount of

A $600,000 bond was retired at 102 when the carrying value of the bond was $622,000. The entry to record the retirement would include a

Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year.

The current carrying value of Kane's $800,000 face value bonds is $797,000. If the bonds are retired at 103, what would be the amount Kane would pay its bondholders?

If a corporation issued $4,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?

233. Bond discount should be amortized to comply with

The interest charged on a $400,000, 90-day note payable, at the rate of 8%, would be

231. A corporation issues $500,000, 8%, 5-year bonds on January 1, 2015 for $479,000. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight- line method of amortization of bond discount, the amount of bond interest expense to be recognized on July 1, 2015 is

The holder of a convertible bond can convert an interest payment received into a cash dividend paid on common stock if the dividend is greater than the interest payment.

When an interest-bearing note matures, the balance in the Notes Payable account is

Most notes are not interest bearing.