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Exam 9: Liabilities

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Question 51

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An obligation that arises from an existing condition whose outcome is uncertain and whose resolution depends on a future event is called a ____________________.

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contingent...

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Question 52

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The interest charged by the bank, at the rate of 9%, on a 3-month, discounted note payable for $100,000 is:

A) $9,000.
B) $2,250.
C) $750.
D) $1,000.

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Question 53

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Bassell Enterprises has long-term assets of $800, current liabilities of $500, and long-term liabilities of $600. If the current ratio is 2.5, then current assets must be:

On January 1, 2012, Investor Corporation issued $10,000,000, 10-year, 5% bonds at 85. Interest payments are made annually. Required: A) Give the journal entry to record the issuance of the bonds on january 1,2012 . B) Give the joumal entry necessary to recognize the interest expense for 2012 uncler the straight-line amoutization method C) Give the iournal entry to record the repayment of the loan principal on December $31,2021$ .

If bonds were initially issued at a premium, the carrying value of the bonds on the issuer's books will:

Flounder Inc. Use the information provided for Flounder Inc. to answer the question(s) using the effective interest method. On January 1, 2012, Flounder Inc. issued $800,000, 10-year, 9% bonds for $662,356. The bonds pay interest on June 30 and December 31. The market rate is 12%. - Refer to the information provided for Flounder Inc. The interest payment on June 30, 2012, is:

When will bonds sell at a discount?

Creative Products Company The following question(s) are based on items that might appear on the balance sheet of a company like the Creative Products Company. Identify how each item would be most likely classified on its balance sheet. - Refer to the information provided for Creative Products Company. Premium on Bonds Payable will appear as:

Moore Company has the following information for the pay period of December 15 - 31, 2012: $\begin{array} { l } \text {Salaries }&\$18,000& \text {fedrial income tax }&\$2,700\\ \text {state income }&\$2,160& \text { FICA}&\$1,017\\\end{array}$ - Salaries are paid on December 31, 2012. On December 31st, Cash would be recorded for: