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Exam 10: Reporting and Analyzing Liabilities

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Question 81

Multiple Choice

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The following partial amortization schedule is available for Courtney Company who sold $500,000, five-year, 10% bonds on January 1, 2014 for $520,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (ii) ?

A) $54,000
B) $46,000
C) $52,000
D) $40,000

E) A) and D)
F) B) and C)

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Question 82

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On January 1, Weatherholt Inc. issued $4,000,000, 9% bonds for $3,756,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Jean Loptein uses the effective-interest method of amortizing bond discount. At the end of the first year, Weatherholt should report unamortized bond discount of

A) $219,600.
B) $228,400.
C) $206,440.
D) $204,000.

E) C) and D)
F) B) and D)

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Question 83

Multiple Choice

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A company receives $176, of which $16 is for sales tax. The journal entry to record the sale would include a

Unearned Rent Revenue is

On January 1, 2014, Powell Corporation issued $600,000, 5%, 5-year bonds dated January 1, 2014, at 95. The bonds pay annual interest on January 1. The company uses the straight-line method of amortization and has a calendar year end. Instructions Prepare all the journal entries that Powell Corporation would make related to this bond issue through January 1, 2015. Be sure to indicate the date on which the entries would be made.

A $600,000 bond was retired at 98 when the carrying value of the bond was $618,000. The entry to record the retirement would include a

Sales taxes collected by a retailer are reported as

The adjusted trial balance for Beneteau Corporation at the end of the 2014 included the following accounts: The total non-current liabilities reported on the statement of financial position at December 31, 2014 are

If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will increase as the bonds approach maturity.

(a)What is a convertible bond? (b) Discuss the advantages of a convertible bond from the standpoint of the bondholders and of the issuing corporation.

Convertible bonds are often called callable bonds.

On January 1, Thompson Corporation issued $3,000,000, 14%, 5-year bonds with interest payable on December 31. The bonds sold for $3,216,288. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

If bonds are issued at a premium, the stated interest rate is

The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account.

The contractual rate of interest is usually stated as a(n)

Neufeld Company issued $800,000 of 6%, 5-year bonds at 98, which pays interest annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

Winrow Company received proceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $400,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the carrying value of the bonds on January 1, 2015?

Foley Company issued $800,000 of 6%, 5-year bonds at 98, which pays interest annually. Assuming straight-line amortization, what is the total interest cost of the bonds?

Bonds are not always categorized as

When the straight-line method of amortization is used for a bond discount, the amount of interest expense for an interest period is calculated by