Exam 14: Long-Term Liabilities

A stream of equal cash payments made at equal time intervals is called a(n):

Garotia Company buys a building on a plot of land for $115,000, paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%. Provide the journal entry for the purchase.

On January 1, 2015, Carter Sales issued $15,000 in bonds for $15,800. They were 8-year bonds with a stated rate of 9%, and pay semiannual interest. Carter Sales uses the straight-line method to amortize the bond premium. After the first interest payment on June 30, 2015, what was the bond carrying amount?

On March 1, 2015, Vinnie Services issued a 5% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 annual principal payments on March 1 of each year plus interest, beginning March 1, 2016. Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period. On March 1, 2016:

The amount of interest paid each period on long-term liabilities remains the same, as well as the principal payments and the total payments.

Which of the following is true of a Discount on Bonds Payable account?

Garotia Company buys a building on a plot of land for $115,000, paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%. The payment will be made in equal monthly installments of $809. Provide the journal entry for the first monthly payment. (Round your answers to nearest whole dollar number).

Which of the following is true of a Premium on Bonds Payable account?

An amortization schedule details each loan payment's allocation between principal and interest and also the beginning and ending balances of the loan.

The Amazing Widget Company issues $500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bond pays interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. The journal entry to record the first interest payment on September 30, 2014 is a:

On April 1, 2015, Ardoos Products borrowed $100,000 on a 15%, 10-year note with annual installment payments of $10,000 plus interest due on April 1 of each succeeding year. Provide the first journal entry for the issuance of the note.

The balance in the Bonds Payable account is a credit of $65,000. The balance in the Discount on Bonds Payable account is a debit of $2,250. The bond's carrying amount is $62,750.

Which of the following describes a secured bond?

On March 21, 2013, the bond accounts of Urban Sales showed the following balances. Urban Sales retires the bonds for $66,150. What will be the journal entry to retire the bonds?

The Amazing Widget Company issues $500,000 of 6%, 10-year bonds at 103 on March 31, 2014. The bond pays interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. Calculate the net balance that will be reported for the bonds on the balance sheet on September 30, 2014.

On March 1, 2015, Vinnie Services issued a 5% long-term notes payable for $20,000. It is payable over a 10-year term in $2,000 principal installments on March 1 of each year, beginning March 1, 2016. Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period. The journal entry to pay the first installment will include a debit to the Interest Expense account for $1,000.

Which of the following describes a serial bond?

The debt to equity ratio measures the proportion of total liabilities relative to the total equity.

Bonds are short-term debt issued to multiple lenders called bondholders, usually in increments of $1,000.

On January 1, 2015, Anderson Company purchases property of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance. The amortization schedule shows that Anderson Company will pay $46,072 per year. Journalize the first yearly payment on January 1, 2016.