Exam 14: Long-Term Liabilities

Which of the following describes a secured bond?

Compute the present value of an ordinary annuity that pays $13,000 per year for 15 years at 10%. Present value of ordinary annuity of $1: 7\% 8\% 9\% 10\% 12\% 11 7.499 7.139 6.805 6.495 5.938 12 7.943 7.536 7.161 6.814 6.194 13 8.358 7.904 7.487 7.103 6.424 14 8.745 8.244 7.786 7.367 6.628 15 9.108 8.559 8.061 7.606 6.811

Alden Corp.has the following balances as of December 31,2019: Total Assets \ 110,000 Total Liabilities 77,000 Total Equity 43,000 Calculate the debt to equity ratio.(Round your answer to two decimal points.)

The face value of a bond payable minus the current balance of the discount account or plus the current balance of the premium account is the bond's carrying amount.

Hardwood Flooring Company buys a building for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11% annual interest.The payments will be made in equal monthly installments of $809.Prepare the journal entry for the first monthly payment.(Round your answers to the nearest whole dollar number.)Omit explanation.

Generally accepted accounting principles require that interest expense be measured using the effective-interest amortization method,unless the straight-line amounts are similar.

On January 1,2019,First Street Sales issued $38,000 in bonds for $15,700.These are six-year bonds with a stated interest rate of 16% that pay semiannual interest.First Street Sales uses the straight-line method to amortize the Bond Discount.Immediately after the issue of the bonds,the ledger balances appeared as follows: Discount on Bonds Payable After the first interest payment on June 30,2019,what is the balance of Discount on Bonds Payable? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

When bonds are retired at maturity,assuming the last interest payment has already been recorded,the journal entry includes a debit to the Bonds Payable account and a credit to the Cash account.

On April 1,201,Arbor Gardening 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 subsequent year.Prepare the journal entry for the issuance of the note.Omit explanation.

On January 1,2019,Mullens Sales issues $10,000 in bonds for $9,400.The bonds are five-year bonds with a stated rate of 4% and pay semiannual interest on June 30 and December 31.Mullens Sales uses the straight-line method to amortize bond discount.Prepare the journal entry for the first interest payment on June 30,2019.Omit explanation.

The face value is $82,000,the stated rate is 10%,and the term of the bond is eight years.The bond pays interest semiannually.At the time of issue,the market rate is 8%.What is the present value of the bond at the issue date? Present value of $1: 4\% 5\% 6\% 7\% 8\% 15 0.555 0.481 0.417 0.362 0.315 16 0.534 0.458 0.394 0.339 0.292 17 0.513 0.436 0.371 0.317 0.270 18 0.494 0.416 0.350 0.296 0.250 19 0.475 0.396 0.331 0.277 0.232 Present value of ordinary annuity of $1: 4\% 5\% 6\% 7\% 8\% 15 11.118 10.380 9.712 9.108 8.559 16 11.652 10.838 10.106 9.447 8.851 17 12.166 11.274 10.477 9.763 9.122 18 12.659 11.690 10.828 10.059 9.372 19 13.134 12.085 11.158 10.336 9.604

A-Plus Carpets Company buys a building for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%.Prepare the journal entry for the purchase.Omit explanation.

Which of the following statements is TRUE of a bond that is issued at a premium?

On January 1,2018,Brazos Company purchased equipment and signed a six-year mortgage note for $97,000 at 15%.The note will be paid in equal annual installments of $25,631,beginning January 1,2019.On January 1,2019,the journal entry to record the first installment payment will include a ________.(Round your answer to the nearest whole number.)

On January 1,2018,Western Services issued $20,000 of 8% bonds that mature in five years.The bonds were issued for $20,750.Prepare the journal entry to issue bonds.Omit explanation.

If the debt to equity ratio is greater than 1,the company is financing more assets with equity than with debt.

Which of the following statements is TRUE if a bond is issued at an amount less than its face value?

On July 1,2018,Shannon Equipment Dealer issued $590,000 of 6% bonds payable that mature in seven years.These bonds were issued at face value and pay interest each June 30 and December 31.Each semiannual interest payment will be higher than the interest expense.

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

A bond is issued at premium ________.