Exam 10: Liabilities

On January 2,2018,AAA Publishing,Inc.received a one-year subscription for $100 to one of the magazines that it publishes.At that time,it debited cash for $100 and credited Deferred Revenue for $100.After all the magazines have been delivered through December 31,2018,what journal entry needs to be recorded?

Callable bonds can be converted to stock.

Wool Co.makes a sale and collects a total of $756,which includes an 8% sales tax.What is the amount that will be credited to the Sales Revenue account?

Thomas Longbow is the only employee of Presido,Inc.During the first week of January,Longbow earned $1,600 and had federal and state income tax withholdings of $80 and $30,respectively.FICA taxes are 7.65% on earnings up to $127,200.State and federal unemployment taxes for the period are $100 and $16,respectively. What is Presido's payroll tax expense for the week?

Which of the following events does not create a liability?

Hardtack Industries borrowed $336,000 from its bank in return for an installment note with 8% interest.Hardtack will make 6 annual payments of $72,682.At the end of the first period,Hardtack will report a note payable on its balance sheet of:

Some bonds allow the borrower to repay the bond by issuing stock.These bonds are known as:

Match each term with the appropriate definition.Not all definitions will be used. -Convertible

Match each term with the appropriate definition.Not all definitions will be used. -Accrued liability

Which of the following accounts could have a non-zero balance on a post-closing trial balance?

When the amount of a contingent liability cannot be reasonably estimated but its likelihood is probable,the company should:

A company retires its bonds with a face value of $100,000 at 105.The carrying value of the bonds at the retirement date is $103,745.The journal entry to record this retirement will include a:

Match each term with the appropriate definition.Not all definitions will be used. -Present value

The entry to record a bond retirement at maturity usually involves recording a gain or loss.

Match each term with the appropriate definition.Not all definitions will be used. -Line of credit

The following information was obtained from Quayle Company's income statement: Income before Interest and Income Tax Expense \ 685,000 Interest Expense 75,000 Income before Income Tax Expense 610,000 Income Tax Expense 213,500 Net Income \ 396,500 What is the times interest earned ratio?

At the beginning of the year,your company borrows $20,000 by signing a four-year promissory note that states an annual interest rate of 8% plus principal repayments of $5,000 each year.Interest is paid at the end of the second and fourth quarters,whereas principal payments are due at the end of each year.How does this new promissory note affect the current and non-current liability amounts reported on the classified balance sheet prepared at the end of the first quarter?

Zorn Inc.makes a sale for $300.The company is required to collect sales taxes amounting to 9%.What is the amount that will be credited to the Sales Tax Payable account?

Match each term with the appropriate definition.Not all definitions will be used. -Premium

Bonds that are not backed by collateral are referred to as "debentures."