Exam 10: Liabilities

228. Trendy Company issued $600,000 of 8%, 5-year bonds at 105. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

The current balance sheet of Greyson Inc. reports total assets of $40 million, total liabilities of $4 million, and stockholders' equity of $36 million. Greyson is considering several financing possibilities in order to expand operations. Each question based on this data is independent of any others. What will be the effect on Greyson's debt to assets ratio if Greyson issues an additional $8 million in stock to finance its expansion?

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

A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate.

All of the following are reported as current liabilities except

Which of the following statements concerning bonds is not a true statement?

The party who has the right to exercise a call option on bonds is the

Premium on Bonds Payable

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.

A debenture bond is an unsecured bond which is issued against the general credit of the borrower.

Long-term liabilities are reported in a separate section of the balance sheet immediately following current liabilities.

Generally, convertible bonds do not pay interest.

The current portion of long-term debt should

212. On January 1, Dade Corporation issued $3,000,000, 7%, 5-year bonds with interest payable on December 31. The bonds sold for $3,216,288. The market rate of interest for these bonds was 6%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

A long-term note that pledges title to specific property as security for a loan is known as a mortgage payable.

The total cost of borrowing is increased only if the

Which of the following is usually not an accrued liability?

Layton Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $29,400. If the sales tax rate is 5%, what amount must be remitted to the state for October's sales taxes?

The interest charged on a $70,000, 2-month note payable, at the rate of 6%, would be

In the balance sheet the account Premium on Bonds Payable is