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Exam 10: Liabilities

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Question 31

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Use the information above to answer the following question.What is the issue price of these bonds?

A) $300,000
B) $285,000
C) $315,000
D) $330,000

E) B) and D)
F) None of the above

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Question 32

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Contingent liabilities arise from past transactions,but depend on future events.

A) True
B) False

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Question 33

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Employer payroll taxes:

A 6-month note is issued on November 1.If no previous accruals have been made,how many months of interest should be accrued on December 31?

Which of the following are generally recorded as liabilities on the balance sheet?

When bonds are retired at their maturity date,the balance in the Bonds Payable account is equal to the bond's:

Arid Company has a quick ratio of 0.90.Which of the following,if it occurred on the last day of the accounting period,would increase Arid's quick ratio?

On January 1,2014,a company sells a 3-year bond with a face value of $50,000 and a stated interest rate of 7%.Because the market interest rate is 5%,the company receives $52,723 for the bond.The company uses the effective interest method of amortization.Fill in Table A.Fill in Table B assuming the market interest rate is 9%,and the company received only $47,469 for the bond and the company uses the effective-interest method.

Your company sells $50,000 of bonds for an issue price of $52,000.Which of the following statements is correct?

On January 1,2014,a company sells a 3-year bond with a face value of $200,000 and a stated interest rate of 8%.Because the market interest rate is lower,the company receives $209,000 for the bond.Fill in Table A assuming the company uses the straight-line method of amortization.Fill in Table B assuming the company received only $194,000 for the bond and used the straight-line method of amortization.

The entry to record a bond retirement at maturity usually involves no gain or loss.

The quick ratio is similar to the current ratio in that it is also a measure used to evaluate whether a company can pay its current liabilities.

When the effective-interest method of amortization is used,what happens to the amount of discount or premium amortized as a bond moves toward maturity?

Which of the following must be paid by both the employee and the employer?

The principal of a loan does not include any interest charges.

A 1-year,$15,000,12 percent note is signed on April 1.If the note is repaid on September 1 of the same year,how much interest expense is incurred?

At the date of maturity,the carrying value of a bond should always be equal to the face value.

Which of the following accounts could have a non-zero balance on a post-closing trial balance?

Use the information above to answer the following question.On January 1,which of the following journal entries will be made by Backyard to record the proceeds and issue of the note?

Use the information above to answer the following question.What would be the amount of Darin's payroll check for the first week of January?