Exam 14: Long-Term Liabilities

On January 2,2017,Chabot Sales issues $10,000 in bonds for $10,900.These are 5-year bonds with a stated rate of 4%,and pay semiannual interest.Chabot Sales uses the straight-line method to amortize bond premium.Prepare the journal entry for the first interest payment on June 30,2017.

Which of the following describes a secured bond?

Term bonds all mature at the same specified time.

The Tarrago Company issues $539,000 of 12%,10-year bonds at 105 on March 31,2017.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 September 30,2017 balance sheet.(Round your intermediate answers to the nearest dollar. )

On July 1,2016,Sharon Equipment Dealer issued $520,000 of 7% bonds payable that mature in five 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 amount of cash paid to the bondholders.

The effective-interest amortization method allocates an amount of bond discount or premium,based on the stated rate of interest,to each interest period over the life of the bond.

On December 31,2016,Thompson Hardware Company purchases $300,000 of property by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.The amortization schedule shows that the company will pay $46,072 per year.Journalize the first yearly payment on December 31,2017.

On April 1,2017,Nurix Manufacturers purchases equipment for $100,000,paying $30,000 in cash and signing a 10-year mortgage for $70,000 at 8% annual interest.Prepare the journal entry to record the acquisition of the equipment.

A mortgage payable is a long-term debt that is backed with a security interest in specific property.

Refer to the following list of liability balances at December 31,2017. What is the total amount of long-term liabilities?

The debt to equity ratio of four companies is given below. Based on the debt to equity ratio,which of the following companies has the least financial risk?

Which of the following statements is true of a bond that is issued at a discount?

When using the effective-interest amortization method,the amount of the interest expense is calculated using the face value of the bonds and the market interest rate.

Marygrove Glassware Company issues $1,012,000 of 9%,10-year bonds at 97 on February 28,2017.The bond pays interest on February 28 and August 31.On August 31,2017,how much cash did Marygrove pay to the bondholders?

On December 31,2017,Lopez Sales has a Bonds Payable balance of $79,000 and a Premium on Bonds Payable balance of $5,600.On the balance sheet,how will this information be shown?

On January 1,2017,Walker Sales issued $19,000 in bonds for $14,300.These are eight-year bonds with a stated rate of 13%,and pay semiannual interest.Walker Sales uses the straight-line method to amortize the bond discount.After the second interest payment on December 31,2017,what is the bond carrying amount? (Round your intermediate answers to the nearest cent,and your final answer to the nearest dollar. )

On June 1,2017,Wilke Services issued $30,000 of 9% bonds that mature in five years.The bonds were issued at a premium,for a total of $31,350.The bonds pay semiannual interest payments on June 30 and December 31 of each year.On December 31,2017,what is the total amount paid to bondholders?

On January 1,2017,Zing Services issued $176,000 of six-year,12% bonds when the market interest rate was 11%.The issue price of the bonds was $192,110.Zing uses the effective-interest method to amortize the bond premium.Semiannual interest payments are made on June 30 and December 31 of each year.How much interest expense will be recorded when the first interest payment is made?

The debt to equity ratio of four companies is given below. Which of the following companies has the greatest financial risk?

On January 1,2016,Brubeck Company purchased equipment and signed a six-year mortgage note for $110,000 at 15%.The note will be paid in equal annual installments of $29,066,beginning January 1,2017.Calculate the balance of Mortgage Payable after the payment of the first installment.(Round your answer to the nearest whole number. )