Exam 14: Long-Term Liabilities

On January 1,2017,Shea Landscaping borrowed $100,000 on a 15%,10-year note with annual installment payments of $10,000 plus interest due on December 31 of each year.Prepare the journal entry for the first installment payment made on December 31,2017.

Which of the following statements is true if a bond is issued for an amount equal to its face value?

What is the only difference between present value and future value?

The balance in the Bonds Payable account is a credit of $72,000.The balance in the Discount on Bonds Payable is a debit of $3,600.The balance sheet will report the bond balance as $75,600.

List the two categories of liabilities reported on the balance sheet and provide an example of each.

When using the effective-interest amortization method,the discount amortization is the excess of the calculated interest expense over the interest payment.

Installment payments for mortgages generally contain both an amount for principal repayment and an amount for interest.

The balance in the Bonds Payable is a credit of $79,000.The balance in the Premium on Bonds Payable is a credit of $1,600.What is the bond carrying amount?

Which of the following is the amount the borrower must pay back to the bondholders at maturity?

If a bond is issued at a premium,the issue price is greater than face value.

On January 1,2017,Toland Sales issued $26,000 in bonds for $20,300.These are eight-year bonds with a stated interest rate of 14% pay semiannual interest.Toland Sales uses the straight-line method to amortize the bond discount.What is the bond carrying amount after the first interest payment on June 30,2017? (Round your intermediate answers to the nearest dollar. )

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

The fact that invested cash earns interest over time is called the time value of money.

On January 1,2016,Bratios Company purchased equipment and signed a six-year mortgage note for $194,000 at 15%.The note will be paid in equal annual installments of $51,262,beginning January 1,2017.On January 1,2017,the journal entry to record the first installment payment will include a ________.(Round your answer to the nearest whole number. )

On March 1,2016,Baker Services issued a 9% long-term notes payable for $18,000.It is payable over a 3-year term in $6,000 annual principal payments on March 1 of each year plus interest,beginning March 1,2017.How will the notes payable be shown on the balance sheet dated December 31,2016?

Compute the present value of $50,000,invested for six years at 9%. Present value of $1:

Trek Holidays Company signed a 8%,10-year note for $167,000.The company paid an installment of $2,900 for the first month.What portion of the first monthly payment is principal? (Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

Which of the following statements is true if a bond is issued for an amount higher than face value?

The difference between mortgages payable and notes payable is that notes payable are always secured by specific assets.

The balance in the Bonds Payable account is a credit of $24,500.The balance in the Premium on Bonds Payable account is a credit of $1,000.The balance sheet will report the bond balance as $23,500.