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Exam 9: Current Liabilities and Long-Term Debt

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Question 31

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Which of the following liabilities can be classified as either current or long term?

A) known and estimated
B) estimated and contingent
C) known and contingent
D) known, estimated, and contingent

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Question 32

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If Sassycat, Inc. had gross profit of $35,000, interest expense $10,000, and operating expenses $20,000, then the interest coverage ratio would be 1.25

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Question 33

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During the month, Southeast Plumbing paid $600 to settle warranty claims. Southeast uses an estimated warranty account. The journal entry to record the payment would have been:

Evergreen Roofing had cash sales for the month totaling $42,000. Evergreen offers a 1-year warranty on its roofing services. If Evergreen estimates warranty claims will equal 3% of sales, the journal entry to record the estimated warranty expense for the month is:

An obligation dependent upon an event that has not yet occurred is an example of a(n) :

If a $6,000, 10 percent, 10-year bond was issued at 106 on October 1, how much will accrued interest payable be on December 31 if interest payments are made annually? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Strong Dog Magazine sold 100 new pre-paid subscriptions to their publication. The subscription money is an example of a(n) :

On January 1, Clive Corporation signed a $450,000, 5%, 30-year mortgage that requires semiannual payments of $14,559 on June 30 and December 31 of each year. The journal entry to record the second semiannual payment would be: (Round your final answer to the nearest dollar.)

Which of the following would be considered a known liability?

After being withheld, payroll taxes become an asset for the company.

The need to create an estimated warranty liability arises from the ________ principle.

A $45,000 bond issue with a stated interest rate of 10%, when the market rate of interest is 7%, means that the bond will sell for:

A person or business who pays another party for the use of an asset is a lessee.

Ronaldo earns $21 per hour and works 40 hours a week. Last week he worked 48 hours; given that his company pays time and a half for overtime-what is Ronaldo's gross pay for the week? (Assume overtime is any time over 40 hours per week. (Assume overtime is any time over 40 hours per week. Round intermediary calculations and your final answer to the nearest cent.)

A $5,000 bond quoted at 104.4 will cost $5,220.

On September 30, 2016, Illusions, Inc. recorded their semi-annual bond interest expense that contained a credit to Discount on bonds payable of $1,800. The adjusting entry on December 31, 2016 will show a credit to Discount on bonds payable of: (Round your final answer to the nearest dollar.)

A company signs a note payable for $4,500 at 11% for 65 days. How much interest (to the nearest cent) will the company owe using a 360-day year? (Round your final answer to the nearest cent.)

The debt ratio is an indicator of a company's profitability.

$500,000 of 8%, 10-year bonds were sold for $520,000 on January 1. The bonds require semiannual interest payments on June 30 and December 31. The entry to record the June 30 interest payment on the bonds would be to:

If Caesar's Coffee Company had total liabilities of $200,000 and total Stockholders' Equity of $150,000, then the debt ratio would be 57%.