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Exam 14: Long-Term Liabilities

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Question 81

Multiple Choice

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Alden Corp.has the following balances as of December 31,2019: Calculate the debt to equity ratio.(Round your answer to two decimal points. )

A) 0.64
B) 0.92
C) 1.56
D) 2.56

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Question 82

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Earning more income on borrowed money than the related interest expense is called ________.

A) operating leverage
B) financial leverage
C) annuity
D) amortization

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Question 83

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On March 21,2019,the bond accounts of Pet Supplies Sales showed the following balances. Pet Supplies Sales retires the bonds for $66,150.Prepare the journal entry to record the retirement of the bonds.Omit explanation.

Which of the following describes a serial bond?

Which of the following describes a secured bond?

On January 1,2019,Outdoor Services issued $20,000 of 8% bonds that mature in five years.They were issued at par.The bonds pay semiannual interest payments on June 30 and December 31 of each year.Provide the journal entry for the payment made on June 30,2019.Omit explanation.

What is the only difference between present value and future value?

What is the difference between simple interest and compound interest?

On December 31,2018,Anderson Hardware Company purchases $300,000 of property by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.The amortization schedule shows that the company will pay $46,072 per year.Journalize the first yearly payment on December 31,2019.Omit explanation.

When computing the present value of a bond,which interest rate is used? Why?

If bonds with a face value of $209,000 are issued at 93,the amount of cash proceeds is ________.

On the maturity date,the bondholder is paid the face amount of the bond plus the last interest payment.

The current portion of notes payable is reported on the balance sheet under current liabilities.

An amortization schedule details each loan payment's allocation between principal as well as interest and the beginning and ending balances of the loan.

Which of the following statements is TRUE if a bond is issued for an amount higher than face value?

Which of the following is the amount the borrower must pay back to the bondholders at maturity?

On January 1,2018,Belview,Inc.issued long-term notes payable for $50,000.The note will be paid over 10 years with payments of $5,000 plus 12% interest due each January 1,beginning January 1,2019.The amortization schedule for the first three payments is provided.Prepare the journal entries for the issuance of the note and for the January 1,2020 note payment.Omit explanation.

If $30,000 is invested for one year at an annual interest rate of 13%,it will grow in value to ________.

A-Plus Carpets Company buys a building for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%.Prepare the journal entry for the purchase.Omit explanation.

On January 1,2018,Allgood Company purchased equipment and signed a six-year mortgage note for $186,000 at 15%.The note will be paid in equal annual installments of $49,148,beginning January 1,2019.Calculate the portion of interest expense paid on the third installment.(Round your answer to the nearest whole number. )