Question 1

211. Bond discount should be amortized to comply with

Accepted Answer

A)  the historical cost principle. 
B)  the expense recognition principle. 
C)  the revenue recognition principle. 
D)  conservatism.

Question 2

Instructions
Compute these values:
(a) Working capital. (b) Current ratio.

Accepted Answer

The answer of Instructions
Compute these values:
(a) Working capital. (b) Current...

Question 3

The adjusted trial balance for Lamar Corp. at the end of the current year, 2018, contained the following accounts.  The total long-term liabilities reported on the balance sheet are

Accepted Answer

A)  $1,945,000. 
B)  $1,935,000. 
C)  $2,095,000. 
D)  $2,085,000.

Question 4

When bonds are converted into common stock,

Accepted Answer

A)  the market price of the stock on the date of conversion is credited to the Common Stock account. 
B)  the market price of the bonds on the date of conversion is credited to the Common Stock account. 
C)  the market price of the stock and the bonds is ignored when recording the conversion. 
D)  gains or losses on the conversion are recognized.

Question 5

The interest charged on a $50,000, 60-day note payable, at the rate of 6%, would be

Accepted Answer

A)  $3,000. 
B)  $1,667. 
C)  $750. 
D)  $500.

Question 6

Companies report current liabilities on the balance sheet in

Accepted Answer

A)  alphabetical order. 
B)  order of maturity. 
C)  random order. 
D)  order of magnitude.

Question 7

Each of the following may be shown on a supporting schedule instead of on the balance sheet except the

Accepted Answer

A)  current maturities of long-term debt. 
B)  conversion privileges. 
C)  interest rates. 
D)  maturity dates.

Question 8

The current balance sheet of Greyson Inc. reports total assets of $40 million, total liabilities of $4 million, and stockholders' equity of $36 million. Greyson is considering several financing possibilities in order to expand operations. What will be the effect on Greyson's debt to assets ratio if Greyson issues an additional $8 million in stock to finance its expansion?

Accepted Answer

A)  The debt to assets ratio will decrease from .1(4/40) to .083 (4/48) after the additional stock sale. 
B)  The debt to assets ratio will decrease from 4/36 before to 4/44 after the additional stock sale. 
C)  The debt to assets ratio will increase from 40 before to 48 after the additional investment. 
D)  The additional stock issuance will have no effect on the debt to assets ratio.

Question 9

A company receives $265, of which $15 is for sales tax. The journal entry to record the sale would include a

Accepted Answer

A)  debit to Sales Tax Expense for $15. 
B)  credit to Sales Taxes Payable for $15. 
C)  debit to Sales Revenue for $265. 
D)  debit to Cash for $250.

Question 10

Bonds that the issuing company can redeem at a stated dollar amount prior to maturity are convertible bonds.

Accepted Answer

A) True 
 B)False

Question 11

The current ratio is current assets divided by ______________.

Accepted Answer

The answer of The current ratio is current assets divided...

Question 12

48. The straight-line method of amortization allocates an increasing amount to interest expense each interest period.

Accepted Answer

A) True 
 B)False

Question 13

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.

Accepted Answer

A) True 
 B)False

Question 14

A debenture bond is an unsecured bond which is issued against the general credit of the borrower.

Accepted Answer

A) True 
 B)False

Question 15

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $630,000, what is the amount of the sales taxes owed to the taxing agency?

Accepted Answer

A)  $600,000 
B)  $630,000 
C)  $31,500 
D)  $30,000

Question 16

Wellington Company had the following transactions involving notes payable.
Nov. 1, 2017 Borrows $180,000 from Olathe State Bank by signing a 3-month, 10% note.
Dec. 31, 2017 Prepares the adjusting entry.
Feb. 1, 2018 Pays principal and interest to Olathe State Bank.
Instructions
Prepare journal entries for each of the transactions.

Accepted Answer

The answer of Wellington Company had the following transactions involving...

Question 17

Winter Company purchased a building on January 2 by signing a long-term $630,000 mortgage with monthly payments of $5,400. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

Accepted Answer

A)  debit to the Cash account for $5,400. 
B)  credit to the Cash account for $5,250. 
C)  debit to the Interest Expense account for $5,250. 
D)  credit to the Mortgage Payable account for $5,400.

Question 18

When a company retires bonds before maturity, the gain or loss on redemption is the difference between the cash paid and the

Accepted Answer

A)  carrying value of the bonds. 
B)  face value of the bonds. 
C)  original selling price of the bonds. 
D)  maturity value of the bonds.

Question 19

Oakley Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $42,800. If the sales tax rate is 7%, what amount must be remitted to the state for February's sales taxes?

Accepted Answer

A)  $2,996 
B)  $2,800 
C)  $4,280 
D)  It cannot be determined.

Question 20

If bonds were issued at a premium, then the contractual interest rate was _____________ than the market interest rate.

Accepted Answer

The answer of If bonds were issued at a premium,...

Exam 10: Liabilities

211. Bond discount should be amortized to comply with

Instructions Compute these values: (a) Working capital. (b) Current ratio.

The adjusted trial balance for Lamar Corp. at the end of the current year, 2018, contained the following accounts. The total long-term liabilities reported on the balance sheet are

When bonds are converted into common stock,

The interest charged on a $50,000, 60-day note payable, at the rate of 6%, would be

Companies report current liabilities on the balance sheet in

Each of the following may be shown on a supporting schedule instead of on the balance sheet except the

A company receives $265, of which $15 is for sales tax. The journal entry to record the sale would include a

Bonds that the issuing company can redeem at a stated dollar amount prior to maturity are convertible bonds.

The current ratio is current assets divided by ______________.

48. The straight-line method of amortization allocates an increasing amount to interest expense each interest period.

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.

A debenture bond is an unsecured bond which is issued against the general credit of the borrower.

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $630,000, what is the amount of the sales taxes owed to the taxing agency?

Winter Company purchased a building on January 2 by signing a long-term $630,000 mortgage with monthly payments of $5,400. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

When a company retires bonds before maturity, the gain or loss on redemption is the difference between the cash paid and the

Oakley Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $42,800. If the sales tax rate is 7%, what amount must be remitted to the state for February's sales taxes?

If bonds were issued at a premium, then the contractual interest rate was _____________ than the market interest rate.