Exam 10: Financing: Long-Term Liabilities

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - Which of the following is LEAST likely to be classified as a long-term liability?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Which of the following is one of the ways bonds can be categorized?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - Which of the following is NOT used to evaluate a company's financial leverage?

On January 1, 2012, Almond Corporation issued $750,000 bonds with a stated interest rate of 10%, compounded semiannually. Interest is paid on January 1 and July 1 and the bonds mature in 10 years. The effective interest rate is also 10%. Prepare the journal entries that are appropriate to account for these bonds on the following dates: January 1, 2012; July 1, 2012; December 31, 2012; and January 1, 2013.

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - Suppose you want to determine the payments you will have to make on a loan for a house. The house will cost $100,000, and your bank requires a 20 percent down payment. The remainder will be financed at 12 percent compounded annually for 25 years. What will be the annual payment?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -The effective interest rate on bonds is also called

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - Assume you are going to purchase a house. You have $40,000 to use as a down payment and can afford a payment of $16,000 per year for 30 years. If interest is 8 percent per year, what is the largest purchase price of the house that you can buy?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - At the end of each year, a mortgage is reported under how many sections of the balance sheet?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Which of the following is an example of off-balance-sheet financing?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -The following entry is made to record the first monthly payment on a $60,000, 9 percent mortgage: Given this entry, the amount of interest included with this payment is

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -If the effective interest rate equals the stated interest rate, a bond will sell at

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Which of the following is NOT true?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Kwancom Corporation, a calendar-year firm, is authorized to issue $200,000 of 10 percent, 20-year bonds dated January 1, 2012, with interest payable on January 1 and July 1 of each year. The entry to account for the discount amortization and accrual of interest on December 31, 2012, would include a

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - The entry to record the annual lease payment on a capitalized lease includes a

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - Hakeem, Inc. reported the following data in its 2011 financial statements: total liabilities $38,400; total stockholders' equity, $19,200; net income, $4,320; income tax expense, $2,880; and interest expense, $2,400. The times interest earned ratio is

On July 1, 2011, Meeker Corporation issued $375,000 bonds with a stated interest rate of 12%, compounded semiannually. Interest is paid on January 1 and July 1 and the bonds mature in 10 years. The effective interest rate is also 12%.

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -What is the approximate present value of $100 to be received in 2 years if interest is 10 percent compounded annually?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - Arsenio plans to invest $10,000 at the end of each of the next ten years. Assume that Arsenio will earn interest at an annual rate of 6 percent compounded annually. The investment at the end of ten years would be (rounded)

On January 1, 2011, Watters Corporation leased a truck under a capital lease. The lease agreement specified payments of $15,000 per year (payable each year on January 2, starting in 2012) for 6 years. The market rate of interest for lease transactions of this type is 12 percent compounded annually.

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -What is the approximate present value of $500 to be received in 1 year if interest is 8 percent compounded annually?