Exam 10: Liabilities

On December 31,2018,Foggy Bottom Co.borrowed $360,000 from Atlantic National Bank,and signed a 12% note payable due in two years.Interest on the note is due at maturity. Required: Part a.Prepare the journal entry to record the borrowing transaction. Part b.Describe how the note should be reported on Foggy Bottom's classified balance sheets at December 31,2018 and December 31,2019. Part c.Prepare the required adjusting entry on December 31,2019 assuming no adjusting entries have been made in 2019. Part d.Prepare the journal entry to record the payment of the interest on December 31,2020. Part e.Prepare the journal entry to record the payment of the note on December 31,2020.

ABC Corp.issued $100,000 of bonds at a premium;as a result,the company:

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

Brighton Company has a debt-to-assets ratio of 0.45.This means that:

On January 1,2018,a company issues 3-year bonds with a face value of $560,000 and a stated interest rate of 8%.Because the market interest rate is higher than the stated interest rate,the company receives $543,200 for the bond. Required: Fill in the table assuming the company uses the straight-line bond amortization.

Viewmont Manufacturing began the year owing its suppliers $4,800 for merchandise purchased last year.Viewmont then sold half of this merchandise for $8,000 on account.Two weeks later,Viewmont paid its suppliers $1,600 and bought another $6,400 of merchandise on account.Viewmont now has an Accounts Payable balance of:

Travis County Bank agrees to lend Brickyard Corporation $200,000 on January 1.Brickyard signs a $200,000,4%,9-month note.Interest is due at maturity on September 30.The company's fiscal year ends June 30 and adjusting entries are recorded at that time only. What journal entry will Brickyard make when paying the note at maturity?

The total amount of interest that will be paid on a four-month,$6,500,9% note payable equals:

Hermosa Vista Company issued $200,000 5-year,7% bonds and received $202,274 in cash.The market rate of interest when the bonds were issued was 6.5%.What is the amount of interest expense to be recorded for the first annual interest period if the company uses simplified effective-interest amortization?

The times interest earned ratio for Bodhaine's Orchard was 8.52 in 2016,6.63 in 2017,and 2.74 in 2018.What is the most likely interpretation of this ratio?

What kind of account is Deferred Revenue?

Redmont Company's gross salaries and wages are $30,000,and it withholds $4,500 for income taxes and $2,000 for FICA taxes,the journal entry to record the employees' pay should include a:

A company sells a bond with a face value of $10,000 and receives a premium of $800.Using simplified effective-interest amortization,what journal entry is used to record the issuance of the bonds?

Gross earnings for the pay period are $138,000.Required payroll deductions are: Social Security $9,246;Medicare $2,001;Federal Income tax $24,840 and State income tax $5,313.What is the net pay to employees?

Match each term with the appropriate definition.Not all definitions will be used. -Effective interest method of amortization

The issue price of each $1,000 bond that pays interest at 5% and has a bond price of 102.10 equals:

On January 1,2018,a company issues 3-year bonds with a face value of $560,000 and a stated interest rate of 8%.Because the market interest rate is lower than the stated interest rate,the company receives $585,200 for the bond.The company uses straight-line bond amortization. Required: Part a.Determine the amount of the premium that will be amortized during the year ending December 31,2018. Part b.Prepare the journal entry to record the first interest payment on December 31,2018.

A bond's issue price is the amount of money that a lender pays (and the company receives)when a bond is:

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

Burlingame Co.is purchasing a new forklift to be used in its warehousing operations.Burlingame borrowed $120,000 from its bank in return for an installment note with 8% interest.Burlingame will make 6 equal annual payments of $25,958.Which of the following is correct regarding this note?