Mc Ch 10

Front 1

Liabilities are classifiedon the balance sheet as current or

Back 1

long term

Front 2

Most companies pay currentliabilities

Back 2

out of current assets

Front 3

A current liability is adebt that can reasonably be expected to be paid

Back 3

within one year, or theoperating cycle, whichever is longer

Front 4

Which of the following most likely would beclassified as a current liability?

a. Dividends payable

b. Bonds payable in 5 years

c. Three-year notes payable

d. Mortgage payable as a single payment in 10years

Back 4

a. dividends payable

Front 5

Failure to record a liability will probably result in

Back 5

an overstated net income

Front 6

Very often, failure torecord a liability means failure to record a(n)

Back 6

expense

Front 7

Current liabilities aredue

Back 7

but not receivable formore than one year

Front 8

Liabilities are classifiedas current or long-term based on their

Back 8

due date

Front 9

Which of the following is not a current liabilityon December 31, 2014?

a. A NotePayable due December 31, 2015

b. AnAccounts Payable due January 31, 2015c. Alawsuit judgment to be decided on January 10, 2015

d. Accrued salaries payable from 2014

Back 9

c. A lawsuit judgment to be decided on January 10, 2015

Front 10

With an interest-bearingnote, the amount of assets received upon issuance of the note is generally

Back 10

equal to the note's face value

Front 11

As interest is recorded onan interest-bearing note, the Interest Expense account is

Back 11

increased; the InterestPayable account is increased

Front 12

The interest charged on a$250,000 note payable, at the rate of 6%, on a 90-day note would be

Back 12

: $250,000 x .06 x 90/360 = $3,750

Front 13

The interest charged on a$250,000 note payable, at the rate of 6%, for a year would be

Back 13

$250,000 x .06 = $15,000

Front 14

Interest expense on aninterest-bearing note is accrued

Back 14

over the life ofthe note

Front 15

Sales taxes collected by aretailer are recorded by crediting

Back 15

Sales Taxes Payable

Front 16

Unearned Rent Revenue is

Back 16

reported as a currentliability

Front 17

The amount of sales taxcollected by a retail store when making sales is

Back 17

a current liability

Front 18

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

Back 18

to Sales Taxes Payable for$16

Front 19

A company receives $261,of which $21 is for sales tax. The journal entry to record the sale wouldinclude a debit to

Back 19

to Cash for $261

Front 20

A retail store creditedthe Sales Revenue account for the sales price and the amount of sales tax on sales.If the sales tax rate is 5% and the balance in the Sales Revenue accountamounted to $252,000, what is the amount of the sales taxes owed to the taxingagency?

Back 20

: ($252,000/1.05) x .05 = $12,000

Front 21

The current portion oflong-term debt should

Back 21

be reclassified as acurrent liability

Front 22

On January 1, 2014, ErmlerCompany, a calendar-year company, issued $1,000,000 of notes payable, of which$250,000 is due on January 1 for each of the next four years. The properbalance sheet presentation on December 31, 2014, is

Back 22

Current liabilities, $250,000;Long-term Debt, $750,000.

Front 23

On January 1, 2014, Keisler Company, acalendar-year company, issued $700,000 of notes payable, of which $175,000 isdue on January 1 for each of the next four years. The proper balance sheetpresentation on December 31, 2014, is

Back 23

Current liabilities, $175,000;Long-term Debt, $525,000

Front 24

Sales taxes collected by aretailer from a customer are expenses

Back 24

of the customers

Front 25

A retailer that collectssales taxes is acting as an agent for the

Back 25

taxing authority

Front 26

Sales taxes collected by aretailer are reported as

Back 26

current liabilities

Front 27

A cash register tape showscash sales of $6,000 and sales taxes of $300. The journal entry to record thisinformation is

Back 27

Cash ................................... 6,300 Sales Revenue.................................. 6,000 SalesTaxes Payable ........................ 300

Front 28

Don's Pharmacy hascollected $600 in sales taxes during March. If sales taxes must be remitted tothe state government monthly, what entry will Don's Pharmacy make to show theMarch remittance?

Back 28

Sales Taxes Payable................... 600

Cash.................................................. 600

Front 29

A cash register tape showscash sales of $2,500 and sales taxes of $200. The journal entry to record thisinformation is

Back 29

Cash 2,700

Sales Tax Payable 200

Sales Revenue 2,500

Front 30

Morgan Company does notring up sales taxes separately on the cash register. Total receipts forFebruary amounted to $25,440. If the sales tax rate is 6%, what amount must beremitted to the state for February's sales taxes?

Back 30

($25,440/ 1.06) x .06 = $1,440

Front 31

Norlan Company does not ring up sales taxesseparately on the cash register. Total receipts for October amounted to $29,400.If the sales tax rate is 5%, what amount must be remitted to the state forOctober's sales taxes?

Back 31

: ($29,400 / 1.05) x .05 = $1,400

Front 32

Tina's Boutique has totalreceipts for the month of $24,255 including sales taxes. If the sales tax rateis 5%, what are Tina's sales for the month?

Back 32

: $24,255 /1.05 = $23,100

Front 33

Dominic's Salon has totalreceipts for the month of $30,210 including sales taxes. If the sales tax rateis 6%, what are Dominic's sales for the month?

Back 33

30,210/1.06= 28,500

Front 34

The following totals for the month of April weretaken from the payroll records of Noll Company.Salaries $60,000

FICA taxes withheld 4,590Income taxes withheld 12,500Medical insurance deductions 2,250

Federal unemployment taxes 160

State unemployment taxes 1,080

The journal entry to record themonthly payroll on April 30 would include a

Back 34

debit to Salaries andWages Expense for $60,000record

Front 35

The entry to record thepayment of net payroll

Back 35

Salaries- FICA withheld- income tax withheld-medical insurance deductions=net payroll #

Front 36

The entry to recordaccrual of employer’s payroll taxes

Back 36

FICA+ Federal unemployment + state unemployment= accrual of employers payroll taxes

Front 37

The entry to record theaccrual of federal unemployment tax would include a

Back 37

credit to federal unemployment taxes payable for amount

Front 38

Keller Company issued afive-year interest-bearing note payable for $200,000 on January 1, 2013. EachJanuary the company is required to pay $40,000 on the note. How will this notebe reported on the December 31, 2014, balance sheet?

Back 38

Long-term debt, $120,000;

Long-term Debt due within one year, $40,000

Front 39

salaries = 30,000

what is account is debited and for how much?

Back 39

debit 30,000

Front 40

The entry to record theaccrual of federal unemployment tax would include

Back 40

credit to FederalUnemployment Taxes Payable

Front 41

Two sisters operate a bed and breakfast on thecoast of Maine. As customers make reservations they are required to pay cash inadvance equal to one-half of the rate for their stay. How should the sistersaccount for the cash received as reservations are made?

Back 41

cash

Unearned service revenue

Front 42

Julie Lambert has a large consulting practice.New clients are required to pay one-half of the consulting fees up front. Thebalance is paid at the conclusion of the consultation. How does Lambert accountfor the cash received at the end of the engagement?

Back 42

cash

unearned service revenue

Service revenue

Front 43

Madson Company typicallysells subscriptions on an annual basis, and publishes six times a year. Themagazine sells 75,000 subscriptions in January at $10 each. What entry is madein January to record the sale of the subscriptions?

Back 43

cash 750,000

Unearned subscrip revenue 750,000

Front 44

From the standpoint of theissuing company, a disadvantage of using bonds as a means of long-termfinancing is that

Back 44

interest must be paid on aperiodic basis regardless of earnings

Front 45

If a corporation issued $8,000,000in bonds which pay 5% annual interest, what is the annual net cash cost of thisborrowing if the income tax rate is 30%?

Back 45

($8,000,000 x .05) x (1 - .30)= $280,000

Front 46

Secured bonds are bondsthat

Back 46

have specific assets ofthe issuer pledged as collateral.

Front 47

A legal document thatindicates the name of the issuer, the face value of the bond and such otherdata is called

Back 47

a bond certificate

Front 48

Stockholders of a companymay be reluctant to finance expansion through issuing more equity because

Back 48

their earnings per share may decrease

Front 49

Which of the following is notan advantage of issuing bonds instead of common stock?

a. Stockholder control is not affected

b. Earnings per share on common stock may belower

c. Tax savings result

d. Each of these answer choices is an advantage.

Back 49

b. Earnings per share oncommon stock may be lower

Front 50

Bonds that are secured byreal estate are termed

Back 50

mortgage bonds

Front 51

Bonds that may be exchanged for common stock atthe option of the bondholders are called

Back 51

convertible bonds

Front 52

Bonds that are subject to retirement at a stateddollar amount prior to maturity at the option of the issuer are called

Back 52

callable bonds

Front 53

Bonds that are issuedagainst the general credit of the borrower are called

Back 53

debenture bonds

Front 54

Corporations are grantedthe power to issue bonds through

Back 54

state laws

Front 55

Bonds are not alwayscategorized as

Back 55

callable or convertible

Front 56

Which o is not a true statement?

a. Bonds are generally sold through aninvestment company.

b. The bond indenture is prepared after thebonds are printed.

c. The bond indenture and bond certificate areseparate documents.

d. The trustee keeps records of each bondholder

Back 56

b. The bond indenture is prepared after the bonds are printed

Front 57

The contractual rate ofinterest is usually stated as a(n)

Back 57

annual rate

Front 58

When authorizing bonds tobe issued, the board of directors does not specify the

Back 58

selling price

Front 59

Bonds with a face value of$300,000 and a quoted price of 102¼ have a selling price of

Back 59

: $300,000 x$1.0225 = $306,750

Front 60

The present value of abond is also known as its

Back 60

market price

Front 61

All are true about convertible bonds except

a. if the market price of common stock increasessubstantially, bondholders with convertible bonds benefit.

b. convertible bonds can be converted intocommon stock at the option of the issuing company.

c. bondholders with convertible bonds receiveinterest on the bonds until conversion.d. convertible bonds sell at a higher price andpay a low rate of interest than those without the conversion option.

Back 61

convertible bonds can beconverted into common stock at the option of the issuing company

Front 62

The contractual interestrate on a bond is often referred to as the

Back 62

stated rate

Front 63

If the market interest rate for a bond is higherthan the stated interest rate, the bond will sell at

Back 63

discount

Front 64

If the market rate ofinterest is greater than the contractual rate of interest, bonds will sell

Back 64

at a discount

Front 65

The interest expenserecorded on an interest payment date is increased

Back 65

by the amortization ofdiscount on bonds payable

Front 66

On January 1, 2014, $2,000,000,10-year, 10% bonds, were issued for $1,940,000. Interest is paid annually onJanuary 1. If the issuing corporation uses the straight-line method to amortizediscount on bonds payable, the monthly amortization amount is

Back 66

: [($2,000,000 -$1,940,000) / 10] / 12 = $500

Front 67

A corporation issues $200,000, 10%, 5-year bondson January 1, 2014, for $191,600. Interest is paid annually on January 1. Ifthe corporation uses the straight-line method of amortization of bond discount,the amount of bond interest expense to be recognized in December 31, 2014’s adjustingentry is

Back 67

: [($200,000 - $191,600) / 5] + ($200,000 x .10) = $21,680

Front 68

If the market rate of interest is 10%, a $10,000,12%, 10-year bond that pays interest annually would sell at an amount

Back 68

greater than face value

Front 69

On January 1, 2014, $2,000,000,5-year, 10% bonds, were issued for $2,120,000. Interest is paid annually onJanuary 1. If the issuing corporation uses the straight-line method to amortizepremium on bonds payable, the monthly amortization amount is

Back 69

: [($2,120,000 -$2,000,000) / 5] / 12 =$2,000

Front 70

A corporation issues $200,000,8%, 5-year bonds on January 1, 2014, for $208,400. Interest is paid annually onJanuary 1. If the corporation uses the straight-line method of amortization ofbond premium, the amount of bond interest expense to be recognized in December 31,2014’s adjusting entry is

Back 70

($200,000 x .08) - [($208,400 - $200,000) /5] = $14,320

Front 71

If the market rate of interest is lower than the contractualinterest rate, the bonds will sell at

Back 71

a premium

Front 72

If bonds are issued at apremium, the stated interest rate isa

Back 72

higher than the marketrate of interest

Front 73

The present value of a$10,000, 5-year bond, will be less than $10,000 if the

Back 73

contractual rate ofinterest is less than the market rate of interest.

Front 74

The market value (present value) of a bond is afunction of all of the following exceptthe

a. dollar amounts to be received.

b. maturity date.

c. market interest rate.

d. type of bonds.

Back 74

type of bond

Front 75

Gomez Corporation issues 600,10-year, 8%, $1,000 bonds dated January 1, 2014, at 96. The journal entry torecord the issuance will show a

Back 75

debit to Cash for $576,000

(600 x $1,000) x .96 = $576,000

Front 76

Yanik Corporation issues 4,000, 10-year, 8%,$1,000 bonds dated January 1, 2014, at 97. The journal entry to record theissuance will show a

Back 76

debit to Discount on BondsPayable for $120,000.

: (4,000 x$1,000) x (1 - .97) =$120,000

Front 77

Molina Corporation issues 4,000,10-year, 8%, $1,000 bonds dated January 1, 2014, at 103. The journal entry torecord the issuance will show a

Back 77

credit to bonds payable for 4,000,000

Front 78

The market rate ofinterest is often called the

Back 78

effective rate

Front 79

If bonds are issued at adiscount, it means that the

Back 79

market interest rate ishigher than the contractual interest rate

Front 80

Selling the bonds at apremium has the effect of

Back 80

causing the total cost ofborrowing to be lower than the bond interest paid

Front 81

When bonds are issued at apremium, the total interest cost of the bonds over the life of the bonds isequal to the amount of

Back 81

interest paid over thelife of the bond minus the amount of premium at sale point

Front 82

The statement "Bond prices vary inverselywith changes in the market rate of interest" means that if the

Back 82

market rate of interestdecreases, then bond prices will go up.

Front 83

The carrying value ofbonds will equal the market price

Back 83

on the date of issuance

Front 84

Over the term of thebonds, the balance in the Discount on Bonds Payable account will

Back 84

decrease

Front 85

The sale of bonds aboveface valuewill

Back 85

will cause the total costof borrowing to be less than the bond interest paid

Front 86

In the balance sheet, theaccount Premium on Bonds Payable is

Back 86

added to bonds payable

Front 87

In the balance sheet, theaccount Discount on Bonds Payable is

Back 87

deducted from bonds payable

Front 88

Bond discount should be amortized to comply with

Back 88

the expense recognition principle

Front 89

Four thousand bonds with a face value of $1,000each, are sold at 102. The entry to record the issuance is

Back 89

cash

premium on bonds payable

bonds payable

Front 90

The journal entry torecord the issuance of bonds at a discount will include a

Back 90

debit to Cash for the faceamount of the bonds minus the amount of the discount

Front 91

If bonds have been issuedat a discount, then over the life of the bonds the

Back 91

carrying value of the bonds will increase

Front 92

Winrow Company received proceeds of $565,500 on10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $600,000,pay interest annually on December 31st, and have a call price of 101. Winrowuses the straight-line method of amortization. What is the amount of interest Winrowmust pay the bondholders in 2013?

Back 92

48,000=600,000*.08

Front 93

Winrow Company receivedproceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2013. The bondshad a face value of $600,000, pay interest annually on December 31st, and havea call price of 101. Winrow uses the straight-line method of amortization. Whatis the amount of interest expense Winrow will show with relation to these bondsfor the year ended December 31, 2014?

Back 93

: ($600,000 -$565,500) / 10 = $3,450; ($600,000 x.08) + $3,450 = $51,450

Front 94

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

Back 94

: [($600,000 - $565,500) ¸ 10] x 2 = $6,900; $565,500 + $6,900 = $572,400

Front 95

Winrow Company receivedproceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2013. The bondshad a face value of $600,000, pay interest annually on December 31st, and havea call price of 101. Winrow uses the straight-line method of amortization. WinrowCompany decided to redeem the bonds on January 1, 2015. What amount of gain orloss would Winrow report on its 2015 income statement?

Back 95

: ($600,000 - $565,500) x 10 = $3,450; ($600,000 / 1.01) - [$565,500 + ($3,450 ´ 2)] = $33,600

Front 96

Hogan Company has $1,000,000of bonds outstanding. The unamortized premium is $14,400. If the companyredeemed the bonds at 101, what would be the gain or loss on the redemption?

Back 96

4,400 gain

($1,000,000 + $14,400) - ($1,000,000 ´ 1.01) = $4,400

Front 97

The current carrying valueof Kennett’s $600,000 face value bonds is $597,750. If the bonds are retired at102, what would be the amount Kennett would pay its bondholders?

Back 97

: $600,000 x1.02 = $612,000

Front 98

Hulse Corporation retiresits $600,000 face value bonds at 105 on January 1, following the payment ofannual interest. The carrying value of the bonds at the redemption date is $622,470.The entry to record the redemption will include

Back 98

debit of $22,470 toPremium on Bonds Payable

$622,470 - $600,000 = $22,470

Front 99

When bonds are retiredbefore maturity

Back 99

either a gain or a loss onredemption can be recorded

Front 100

A $900,000 bond was retired at 98 when the carryingvalue of the bond was $888,000. The entry to record the retirement wouldinclude a

Back 100

gain on bond redemption of$6,000

: $888,000 - ($900,000 x .98) = $6,000

Front 101

Restoration Company issued bonds that had thefollowing data associated with them:Interest to be paid is $40,000.Interest expense to be recorded is $45,000.Which of the followingcharacteristics is true?

Back 101

After recording theinterest expense, the amortization will increase the bond carrying value

Front 102

All of the following are true regarding financialstatement analysis ratios associated with liabilities except

a. a high times interest earned ratio indicatesthat a company is more likely to meet interest payments as scheduled.

b. high liquidity ratios mean that lines ofcredit should be high to compensate.

c. if a company's current ratio is lower than theindustry average, then it may lack liquidity.d. unrecordedobligations causing sizeable differences between liquidity and solvency ratioscan be ignored

Back 102

b. high liquidity ratios mean that lines ofcredit should be high to compensate.

Front 103

From an accounting standpoint, all of thefollowing are contingencies that must be evaluated for off-balance sheetpurposes excepta. product warranties.

b. general business risks.

c. money-back guarantees for products.

d. environmental cleanup obligations.

Back 103

b. general business risks

Front 104

A measure of a company’ssolvency is the

Back 104

times interest earned

Front 105

The times interest earnedis computed by dividing

Back 105

income before interestexpense and income taxes by interest expense

Front 106

In a recent year GarveyCorporation had net income of $100,000, interest expense of $20,000, and taxexpense of $30,000. What was Garvey Corporation’s times interest earned for theyear?

Back 106

: ($100,000 + $20,000 +$30,000) ¸ $20,000 = 7.50

Front 107

Liquidity ratios measure acompany's

Back 107

short-term debt payingability

Front 108

The relationship betweencurrent assets and current liabilities is

Back 108

useful in evaluating a company's liquidity

Front 109

In a recent year Ley Corporation had net incomeof $150,000, interest expense of $30,000, and a times interest earned ratio of 8.What was Ley Corporation’s income before taxes for the year?

Back 109

: (x + $30,000) /$30,000

x=210,000

Front 110

The adjusted trial balance for Hamilton Corp. atthe end of the current year, 2014, contained the following accounts.5-year BondsPayable 8% $1,200,000BondInterest Payable 50,000Premium onBonds Payable 100,000NotesPayable (3 mo.) 40,000NotesPayable (5 yr.) 165,000MortgagePayable ($15,000 due rn) 200,000Salaries andWages Payable 18,000TaxesPayable (due 3/15 of next yr) 25,000The total long-term liabilitiesreported on the balance sheet are

Back 110

: $120,000 + $100,000 + $165,000 + ($200,000 - $15,000) = $1,650,000

Front 111

debt assets ratio is

Back 111

total liabilities/ total assets

Front 112

Oliver Company issued $800,000of 6%, 5-year bonds at 98. Assuming straight-line amortization and annualinterest payments, how much bond interest expense is recorded on the nextinterest date?

Back 112

: ($800,000 / .06) + [($800,000 / .02) ¸ 5] = $51,200

Front 113

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

Back 113

: ($800,000 x .06 x 5) + ($800,000 x .02) =$256,000

Front 114

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

Back 114

($800,000 x .98) + [($800,000 x .02) /5] = $787,200

Front 115

Larson Company issued $750,000of 8%, 5-year bonds at 106. Assuming straight-line amortization and annualinterest payments, what is the amount of the amortization at each interestpayment point?

Back 115

[$750,000x (1.06 - 1.00)] /5 = $9,000

Front 116

Parker Company issued ten-year, 9%, bonds payablein 2014 at a premium. During 2014, the company’s accountant failed to amortizeany of the bond premium. The omission of the premium amortization will

Back 116

causenet income for 2014 to be understated.

Front 117

When the straight-line method of amortization isused for a bond premium, the amount of interest expense for an interest periodis calculated by

Back 117

subtracting the amount ofpremium amortized for that period from the amount of cash paid for interestduring the period.

Front 118

When the straight-linemethod of amortization is used for a bond discount, the amount of interestexpense for an interest period is calculated by

Back 118

adding the amount of discountamortized for that period to the amount of cash paid for interest during theperiod

Front 119

On January 1, Sewell Corporation issues $2,000,000,5-year, 12% bonds at 96 with interest payable on January 1. The entry onDecember 31 to record accrued bond interest and the amortization of bonddiscount using the straight-line method will include a

Back 119

credit to Discount onBonds Payable, $16,000

: [$2,000,000 x(1.00 - .96)] /5 = $16,000

Front 120

On January 1, SewellCorporation issues $2,000,000, 5-year, 12% bonds at 96 with interest payable onJanuary 1. What is the carrying value of the bonds at the end of the thirdinterest period?

Back 120

: ($2,000,000 x.96) + [($2,000,000 x .04) x 3/5] = 1,968,000

Front 121

If bonds are originallysold at a discount using the straight-line amortization method

Back 121

unamortized discount issubtracted from the face value of the bond to determine its carrying value

Front 122

Which of the followingstatements regarding the effective interest method of accounting for bondscharacteristics is false?

Back 122

Theamount of periodic interest expense decreases over the life of a discountedbond issue when the effective interest method is used.

Front 123

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

Back 123

$3,216,288 ´ .12 = $385,955

Front 124

Warner Company issued $4,000,000 of 6%, 10-yearbonds on one of its interest dates for $3,454,800 to yield an effective annualrate of 8%. The effective-interest method of amortization is to be used. Whatamount of discount (to the nearest dollar) should be amortized for the first interestperiod?

Back 124

: ($3,454,800 x.08) - ($4,000,000 x .06) = $36,384

Front 125

When the effective-interestmethod of amortization is used for a bond premium, the amount of interestexpense for an interest period is calculated multiplying the

Back 125

carrying value of thebonds at the beginning of the period by the effective interest rate

Front 126

The amortization of a bondpremium will result in reporting an amount of interest expense for an interestperiod that

Back 126

is less than the amount ofcash to be paid for interest for the period

Front 127

The effective-interestmethod of amortization of bond premiums and discounts is considered superior tothe straight-line method because it results in a(n)

Back 127

uniform rate of interestcounts

Front 128

Which of the followingstatements best describes the behavior over time of the components of equalmortgage payments?

Back 128

Payment of principalincreases and interest expense decreases

Front 129

Thayer Company purchased a building on January 2by signing a long-term $2,520,000 mortgage with monthly payments of $23,100.The mortgage carries an interest rate of 10 percent. The entry to record themortgage will include a

Back 129

credit to the Mortgage Payableaccount for $2,520,000

Front 130

Thayer Company purchased a building on January 2by signing a long-term $2,520,000 mortgage with monthly payments of $23,100.The mortgage carries an interest rate of 10 percent. what is the face value

Back 130

2,520,000

Front 131

Thayer Company purchased abuilding on January 2 by signing a long-term $2,520,000 mortgage with monthlypayments of $23,100. The mortgage carries an interest rate of 10 percent. Theamount owed on the mortgage after the first payment will be

Back 131

2,517,900

Front 132

Collins Company borrowed $750,000from BankTwo on January 1, 2013 in order to expand its mining capabilities. Thefive-year note required annual payments of $195,327 and carried an annualinterest rate of 9.5%. What is the amount of expense Collins must recognize on its2014 income statement?

Back 132

$59,463

Front 133

Collins Company borrowed $750,000from BankTwo on January 1, 2013 in order to expand its mining capabilities. Thefive-year note required annual payments of $195,327 and carried an annualinterest rate of 9.5%. What is the balance in the notes payable account atDecember 31, 2014?

Back 133

$490,059

Front 134

Fornelli Corporationborrowed $480,000 from Central Bank on May 31, 2013. The three-year, 7% note requiredannual payments of $182,904 beginning May 31, 2014. Interest expense for theyear ended December 31, 2013 was

Back 134

19,600

Front 135

Fornelli Corporationborrowed $480,000 from Central Bank on May 31, 2013. The three-year, 7% noterequired annual payments of $182,904 beginning May 31, 2014. The total amountof interest to be paid over the life of the loan is

Back 135

$68,712

Front 136

Wolford Company borrowed $1,000,000from U.S. Bank on January 1, 2013 in order to expand its mining capabilities.The five-year note required annual payments of $260,436 and carried an annualinterest rate of 9.5%. What is the amount of expense Wolford must recognize on its2014 income statement?

Back 136

$79,284

Front 137

Wolford Company borrowed $1,000,000from U.S. Bank on January 1, 2013 in order to expand its mining capabilities.The five-year note required annual payments of $260,436 and carried an annualinterest rate of 9.5%. What is the balance in the notes payable account atDecember 31, 2014?

Back 137

$653,412

Front 138

Sielert Corporationborrowed $900,000 from National Bank on May 31, 2013. The three-year, 7% noterequired annual payments of $342,945 beginning May 31, 2014. Interest expensefor the year ended December 31, 2013 was at

Back 138

$36,750

Front 139

Sielert Corporationborrowed $900,000 from National Bank on May 31, 2013. The three-year, 7% noterequired annual payments of $342,945 beginning May 31, 2014. The total amountof interest to be paid over the life of the loan is

Back 139

$128,835