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Exam 11: Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

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Question 51

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On November 1,2013,EZ Products borrowed $48,000 on a 5%,10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year.Please provide the first journal entry for the initial issuance of the note. $\begin{array} { | l | l | l | } \hline \quad\quad& \quad&\quad \\\hline & & \\\hline\end{array}$

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Question 52

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On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were sold at discount,for a total of $19,000.Please provide the journal entry to issue the bonds. $\begin{array} { | l | l | l | } \hline & & \\\hline & & \\\hline\end{array}$

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Question 53

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McDonald Sales prepared a bond issue of $20,000 dated January 1,2013.The bonds have a stated rate of 3% and a term of 6 years.The bond issue was delayed,and the bonds were finally sold on March 1,2013 at par.On June 30,2013,the first semiannual interest payment is made.Please provide the journal entry for that payment transaction. $\begin{array} { | l | l | l | } \hline \quad\quad& \quad&\quad \\\hline & & \\\hline & & \\\hline\end{array}$

On December 31,2013,Peterson Sales has a bonds payable balance of $40,000 and a premium on bonds payable of $900.On the balance sheet,how will this information be shown?

On November 1,2014,EZ Products borrowed $48,000 on a 5%,10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year.At the end of 2014,EZ Products accrued interest expense.No further entries were made until November 1,2015 when the first installment payment was made.That payment included both principal and interest.Please provide the journal entry for the installment payment made on November 1,2015. $\begin{array} { | l | l | l | } \hline \quad\quad& \quad&\quad \\\hline & & \\\hline & & \\\hline & & \\\hline\end{array}$

Please refer to the following list of liability balances. $\begin{array}{|l|r|}\hline \text { Accounts payable } & \$ 12,000 \\\hline \text { Employee benefits payable } & 360 \\\hline \text { Employee income tax payable } & 190 \\\hline \text { Interest payable } & 1,300 \\\hline \text { Estimated warranty payable } & 2,600 \\\hline \text { Long-term notes payable } & 32,000 \\\hline \text { FICA tax payable } & 590 \\\hline \text { Sales tax payable } & 370 \\\hline \text { Long-term notes payable } & 4,000 \\\hline \text { Bond payable } & 50,000 \\\hline \text { Current portion of long-term notes payable } & 2,000 \\\hline\end{array}$ - What is the total amount of long-term liabilities?

Which of the following describes the term maturity date?

On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were sold at par.The bonds pay semiannual interest payments on June 30 and December 31 of each year.On June 30,2013,how much are the total interest payments made to bondholders?

The difference between a mortgage payable and a note payable is that notes payable are always long-term.

On July 1,2013,Avery Services issued a 4% long-term note payable for $10,000.It is payable over a 5-year term in $2,000 principal installments on July 1 of each year. -Which of the following entries needs to be made at July 1,2013 to reclassify the current portion of the note?

On January 1,2014,Partridge Company issued $50,000 of 6-year bonds with a stated rate of 3%.The market rate at time of issue was 4%,so the bonds were discounted and sold for $47,331.Partridge uses the effective-interest rate of amortization for bond discount.Semiannual interest payments are made on June 30 and December 31 of each year.Please complete the amortization table for the first four interest payments.

On July 1,2013,Avery Services issued a long-term note payable for $10,000.It is payable over a 5-year term in $2,000 installments on July 1 of each succeeding year.Please provide the initial journal entry for the issuance of the note. $\begin{array} { | l | l | l | } \hline \quad\quad& \quad&\quad \\\hline & & \\\hline\end{array}$

On July 1,2013,Avery Services issued a long-term note payable for $10,000.It is payable over a 5-year term in $2,000 installments on July 1 of each succeeding year.When the note was issued,the principal amount was initially recorded in Long-term notes payable.In addition,a second entry was made to reclassify the current portion.Please provide the journal entry needed for that reclassification. $\begin{array} { | l | l | l | } \hline \quad\quad& \quad&\quad \\\hline & & \\\hline\end{array}$

On October 15,2013,Rural Sales has a bond with balances as shown below. If Rural Sales wishes to retire the bonds for $82,000,what will be the effect on the income statement?

The balance in the Bonds payable account is a credit of $50,000.The balance in the Discount on bonds payable is a debit of $1,500.The balance sheet will report the bond balance as $48,500.

If a bond's stated interest rate is higher than the market rate,which of the following is TRUE?

On January 1,2013,Davie Services issued $20,000 of 8% bonds that mature in five years.They were sold at discount,for a total of $19,000.The bonds pay semiannual interest payments on June 30 and December 31 of each year.On June 30,2013,how much is the total amount paid to bondholders?

On July 1,2013,Avery Services issued a 4% long-term note payable for $10,000.It is payable over a 5-year term in $2,000 principal installments on July 1 of each year.Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period. -What happens on December 31,2013 before statements are prepared?

On November 1,2012,EZ Products borrowed $48,000 on a 5%,10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year. -On December 31,2013,what will the balance be in the account titled Long-term notes payable?

If a bond is issued at a premium,it will sell for more than face value.