Question 1

The adjusting entry at December 31,2018,with respect to this note included:

Accepted Answer

A) A debit to Interest Expense for $18,000. 
B) A credit to Cash for $18,000. 
C) A credit to Notes Payable for $18,000. 
D) A credit to Interest Expense for $18,000. 
A) A debit to Interest Expense for $18,000. 
B) A credit to Cash for $18,000. 
C) A credit to Notes Payable for $18,000. 
D) A credit to Interest Expense for $18,000.

Question 2

On March 1,2018,five-year bonds are sold for $508,026 that have a face value of $500,000 and an interest rate of 10%.Interest is paid semi-annually on March 1 and September 1.Using the straight-line amortization method,prepare the borrower's journal entries on:
March 1,2018;September 1,2018;December 31,2018;and March 1,2019.

Accepted Answer

The answer of On March 1,2018,five-year bonds are sold for...

Question 3

An employer's total payroll-related costs always exceed the wages and salaries earned by employees by:

Accepted Answer

A) Amounts withheld from employees' pay. 
B) Payroll taxes plus mandated programs such as workers' compensation insurance. 
C) 50%. 
D) Employers' payroll-related costs actually are less than the gross wages and salaries earned by employees,because of amounts withheld from employees' checks. 
A) Amounts withheld from employees' pay. 
B) Payroll taxes plus mandated programs such as workers' compensation insurance. 
C) 50%. 
D) Employers' payroll-related costs actually are less than the gross wages and salaries earned by employees,because of amounts withheld from employees' checks.

Question 4

Assets that have been pledged as security for a loan:

Accepted Answer

A) Are reported as liabilities on the balance sheet. 
B) Must be sold when the loan matures. 
C) Become the property of the lender until the loan is paid in full. 
D) Are disclosed in the notes to the financial statements. 
A) Are reported as liabilities on the balance sheet. 
B) Must be sold when the loan matures. 
C) Become the property of the lender until the loan is paid in full. 
D) Are disclosed in the notes to the financial statements.

Question 5

Since payment is due within one year,the current portion of long-term debt should be reported separately in the long-term liabilities section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

With respect to this bond issue,Cricket Corporation's balance sheet at December 31,Year 1,will include:

Accepted Answer

A) Bonds payable of $61,800,000. 
B) Bonds payable of $63,600,000. 
C) Bonds payable of $60 million,as well as interest payable of $1,800,000. 
D) Bonds payable of $60 million,as well as interest payable of $3,600,000. 
A) Bonds payable of $61,800,000. 
B) Bonds payable of $63,600,000. 
C) Bonds payable of $60 million,as well as interest payable of $1,800,000. 
D) Bonds payable of $60 million,as well as interest payable of $3,600,000.

Question 7

With respect to this bond issue,Greenway's balance sheet at December 31,Year 1,will include:

Accepted Answer

A) Bonds payable of $20,500,000. 
B) Bonds payable of $19,500,000. 
C) Bonds payable of $20 million,as well as interest payable of $1,500,000. 
D) Bonds payable of $20 million,as well as interest payable of $500,000. 
A) Bonds payable of $20,500,000. 
B) Bonds payable of $19,500,000. 
C) Bonds payable of $20 million,as well as interest payable of $1,500,000. 
D) Bonds payable of $20 million,as well as interest payable of $500,000.

Question 8

The underwriter guarantees the issuing corporation a specific price for the entire bond issue and sells the bonds to the investing public at a higher price.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following would cause a lease to be accounted for as a capital lease?

Accepted Answer

A) The lease payments are greater than $10,000 per month. 
B) The leased property is located on premises owned by the lessee. 
C) The lease term is more than 75% of economic life of the property. 
D) The value of the leased property is greater than 10% of the net assets of the lessee. 
A) The lease payments are greater than $10,000 per month. 
B) The leased property is located on premises owned by the lessee. 
C) The lease term is more than 75% of economic life of the property. 
D) The value of the leased property is greater than 10% of the net assets of the lessee.

Question 10

Fully amortizing installment note payable
On October 31,2018 Ronald signed a 2-year installment note in the amount of $50,000 in conjunction with the purchase of equipment.This note is payable in equal monthly installments of $2,354,which include interest computed at an annual rate of 12%.The first monthly payment is made on November 30,2018.This note is fully amortizing over 24 months.
Complete the amortization table for the first two payments by entering the correct dollar amounts in the blank spaces provided.In addition,answer the questions that follow.
   (a)With respect to this note,Ronald's 2018 income statement includes interest expense of $________,and Ronald's balance sheet at December 31,2018,includes a total liability for this note payable of ________.(Do not separate into current and long-term portions. )
(b)The aggregate monthly cash payments Ronald will make over the 2-year life of the note payable amount to $________.
(c)Over the 2-year life of the note,the amount Ronald will pay for interest amounts to $________.

Accepted Answer

@#IMG-DLM& (a)With respect to this note,Ronald's 2

Question 11

Which of the following is not a characteristic of an estimated liability?

Accepted Answer

A) The liability is known to exist. 
B) The precise dollar amount cannot be determined until a later date. 
C) The liability should not be recorded in the accounting records until future events have determined the exact amount. 
D) The liability stems from past transactions. 
A) The liability is known to exist. 
B) The precise dollar amount cannot be determined until a later date. 
C) The liability should not be recorded in the accounting records until future events have determined the exact amount. 
D) The liability stems from past transactions.

Question 12

The amount of FICA tax and Medicare tax withheld from an employee is used to pay the employer's percentage of the tax and is mailed to the government quarterly.

Accepted Answer

A) True 
 B)False

Question 13

[The following information applies to the questions displayed below.]
On December 1,Year 1,Bradley Corporation incurs a 15-year $200,000 mortgage liability in conjunction with the acquisition of an office building.This mortgage is payable in monthly installments of $2,400,which include interest computed at the rate of 12% per year.The first monthly payment is made on December 31,Year 1.
-Compute the total amount to be paid by Bradley over the 15-year life of the mortgage.

Accepted Answer

A) $200,000 
B) $562,000 
C) $432,000 
D) $474,000 
A) $200,000 
B) $562,000 
C) $432,000 
D) $474,000

Question 14

A pension fund is an independent entity managed by a bank or insurance company.

Accepted Answer

A) True 
 B)False

Question 15

[The following information applies to the questions displayed below.]
On April 1,year 1,Cricket Corporation issues $60 million of 12%,10-year bonds payable at par.Interest on the bonds is payable semiannually each April 1 and October 1.
-The amount of cash paid to bondholders for interest during Year 1,is:

Accepted Answer

A) $6,600,000. 
B) $5,400,000. 
C) $3,600,000. 
D) $1,800,000. 
A) $6,600,000. 
B) $5,400,000. 
C) $3,600,000. 
D) $1,800,000.

Question 16

The quick ratio is a more stringent measure of solvency than the current ratio.

Accepted Answer

A) True 
 B)False

Question 17

The carrying value of this liability in Webster Company's December 31,2019,balance sheet is:

Accepted Answer

A) $1,000,000. 
B) $970,000. 
C) $976,000. 
D) $967,000. 
A) $1,000,000. 
B) $970,000. 
C) $976,000. 
D) $967,000.

Question 18

What is the amount of the interest expense Able will recognize on this note in 2019?

Accepted Answer

A) $18,000 
B) $31,500 
C) $36,000 
D) $54,000 
A) $18,000 
B) $31,500 
C) $36,000 
D) $54,000

Question 19

Convertible bonds can be exchanged for common stock at the option of the company.

Accepted Answer

A) True 
 B)False

Question 20

Sinking funds make a bond issue less attractive to the investor.

Accepted Answer

A) True 
 B)False

Exam 10: Liabilities

The adjusting entry at December 31,2018,with respect to this note included:

An employer's total payroll-related costs always exceed the wages and salaries earned by employees by:

Assets that have been pledged as security for a loan:

Since payment is due within one year,the current portion of long-term debt should be reported separately in the long-term liabilities section of the balance sheet.

With respect to this bond issue,Cricket Corporation's balance sheet at December 31,Year 1,will include:

With respect to this bond issue,Greenway's balance sheet at December 31,Year 1,will include:

The underwriter guarantees the issuing corporation a specific price for the entire bond issue and sells the bonds to the investing public at a higher price.

Which one of the following would cause a lease to be accounted for as a capital lease?

Which of the following is not a characteristic of an estimated liability?

The amount of FICA tax and Medicare tax withheld from an employee is used to pay the employer's percentage of the tax and is mailed to the government quarterly.

A pension fund is an independent entity managed by a bank or insurance company.

The quick ratio is a more stringent measure of solvency than the current ratio.

The carrying value of this liability in Webster Company's December 31,2019,balance sheet is:

What is the amount of the interest expense Able will recognize on this note in 2019?

Convertible bonds can be exchanged for common stock at the option of the company.

Sinking funds make a bond issue less attractive to the investor.

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