Question 1

Putman Company had cash sales of $75,950 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale.

Accepted Answer

The answer of Putman Company had cash sales of $75,950...

Question 2

Which of the following statements about liabilities in incorrect? Under IFRS, companies sometimes show
A) liabilities before assets.
B) long-term liabilities before current assets.
C) current liabilities netted against current assets.
D) liabilities in order of magnitude.
IFRS.

Accepted Answer

The answer of Which of the following statements about liabilities...

Question 3

BE 249
On January 1, 2018, Morris Enterprises issued 9%, 5-year bonds with a face amount of $900,000 at par. Interest is payable annually on January 1.
Instructions
Prepare the entries to record the issuance of the bonds and the first annual interest accrual on December 31.

Accepted Answer

The answer of BE 249
On January 1, 2018, Morris Enterprises...

Question 4

On December 1, Gilman Corporation borrowed $20,000 on a 90-day, 6% note. Prepare the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note.

Accepted Answer

The answer of On December 1, Gilman Corporation borrowed $20,000...

Question 5

BE 254
Roxy Inc. issues a $1,500,000, 10%, 10-year mortgage note on December 31, 2018, to obtain financing for a new building. The terms provide for annual installment payments of $244,118.
Instructions
Prepare the entry to record the mortgage loan on December 31, 2018, and the first installment payment on December 31, 2019.

Accepted Answer

The answer of BE 254
Roxy Inc. issues a $1,500,000, 10%,...

Question 6

BE 257
On January 1, 2018, Hogan Enterprises issued 8%, 20-year bonds with a face amount of $3,000,000 at 101. Interest is payable annually on January 1.
Instructions
Prepare the entries to record the issuance of the bonds and the first annual interest accrual and amortization assuming that the company uses straight-line amortization.

Accepted Answer

The answer of BE 257
On January 1, 2018, Hogan Enterprises...

Question 7

BE 258
On January 1, 2018, Tape Enterprises issued 9%, 10-year bonds with a face amount of $700,000 at 96. Interest is payable annually on January 1. The bonds were issued for an effective interest rate of 10%.
Instructions
Prepare the entries to record the issuance of the bonds and the first annual interest accrual and amortization assuming that the company uses effective-interest amortization.

Accepted Answer

The answer of BE 258
On January 1, 2018, Tape Enterprises...

Question 8

Identify which of the following would be classified as current liabilities as of December 31, 2017:
1. Salaries and Wages Payable
2. Bonds Payable, maturing in 2022
3. Interest Payable, due July 1, 2018
4. Sales Taxes Payable
5. Notes Payable, due January 30, 2019

Accepted Answer

The answer of Identify which of the following would be...

Question 9

Howell Company has the following selected accounts after posting adjusting entries: $\begin{array}{lr}
\text { Accounts Payable } & 55,000 \
\text { Notes Payable, 3-month } & 70,000 \
\text { Accumulated Depreciation-Equipment } & 14,000 \
\text { FICA Taxes Payable } & 27,000 \
\text { Notes Payable, 5-year, 8\% } & 30,000 \
\text { Warranty Liability } & 34,000 \
\text { Payroll Tax Expense } & 6,000 \
\text { Interest Payable } & 3,000 \
\text { Mortgage Payable } & 200,000 \
\text { Sales Taxes Payable } & 16,000
\end{array}$ Instructions
Prepare the current liability section of Howell Company's balance sheet, assuming $25,000 of the mortgage is payable next year. (List liabilities in magnitude order, with largest first.)

Accepted Answer

The answer of Howell Company has the following selected accounts...

Question 10

The effective-interest method for amortization of bond discounts is required under
A) GAAP only.
B) IFRS only.
C) Both GAAP and IFRS.
D) Neither GAAP nor IFRS.
IFRS.

Accepted Answer

Both GAAP and IFRS require the use of the effective-interest method for amortizing bond discounts, as it provides a more accurate reflection of the interest expense over the life of the bond.

Question 11

Layton Inc. is considering two alternatives to finance its construction of a new $5 million plant.
(a) Issuance of 500,000 shares of common stock at the market price of $10 per share.
(b) Issuance of $5 million, 9% bonds at par.
Instructions

Accepted Answer

The answer of Layton Inc. is considering two alternatives to...

Question 12

BE 253
Queen Company issued bonds with a face amount of $2,000,000 in 2015. As of January 1, 2018, the balance in Discount on Bonds Payable is $6,000. At that time, Queen redeemed the bonds at 102.
Instructions
Assuming that no interest is payable, make the entry to record the redemption.

Accepted Answer

The answer of BE 253
Queen Company issued bonds with a...

Question 13

During December 2017, Markowitz Publishing sold 4,500 12-month annual magazine subscriptions at a rate of $20 each. The first issues were mailed in February 2018. Prepare the entries on Markowitz's books to record the sale of the subscriptions and the mailing of the first issues.

Accepted Answer

The answer of During December 2017, Markowitz Publishing sold 4,500...

Question 14

BE 250
On January 1, 2018, Bose Company issued bonds with a face value of $600,000. The bonds carry a stated interest of 7% payable each January 1.
Instructions
a. Prepare the journal entry for the issuance assuming the bonds are issued at 95.
b. Prepare the journal entry for the issuance assuming the bonds are issued at 105.
,

Accepted Answer

The answer of BE 250
On January 1, 2018, Bose Company...

Question 15

Golf Pro Publications publishes a golf magazine for women. The magazine sells for $3 a copy on the newsstand. Yearly subscriptions to the magazine cost $24 per year (12 issues). During December 2017, Golf Pro Publications sells 12,000 copies of the golf magazine at newsstands and receives payment for 25,000 subscriptions for 2018. Financial statements are prepared monthly.
Instructions
(a) Prepare the December 2017 journal entries to record the newsstand sales and subscriptions received.
(b) Prepare the necessary adjusting entry on January 31, 2018. The January 2018 issue has been mailed to subscribers.

Accepted Answer

The answer of Golf Pro Publications publishes a golf magazine...

Question 16

BE 252
On January 1, 2017, Zappa Enterprises sold 8%, 20-year bonds with a face amount of $1,200,000 for $1,140,000. Interest is payable annually on January 1.
Instructions
Calculate the carrying value of the bond at December 31, 2017 and 2018.

Accepted Answer

The answer of BE 252
On January 1, 2017, Zappa Enterprises...

Question 17

Kingery Sales Company has the following selected accounts after posting adjusting entries:  Instructions
Prepare the current liability section of Kingery Sales Company's balance sheet, assuming $16,000 of the mortgage is payable next year.

Accepted Answer

The answer of Kingery Sales Company has the following selected...

Question 18

Under IFRS, the proceeds from the issuance of convertible debt are reported as
A) debt only.
B) equity only.
C) debt or equity depending on the circumstances.
D) both debt and equity.
IFRS.

Accepted Answer

Under IFRS, the proceeds from the issuance of convertible debt are reported as both debt and equity. The debt component reflects the present value of the future cash flows associated with the debt, while the equity component reflects the value of the option to convert the debt to equity. The equity component is calculated by deducting the fair value of the debt component from the total proceeds received from the issuance of the convertible debt.

Question 19

BE 251
On January 1, 2018, Frog Corporation issued $800,000, 8%, 10-year bonds at face value. Interest is payable annually on January 1. Frog Corporation has a calendar year end.
Instructions
Prepare all entries related to the bond issue for 2018.

Accepted Answer

The answer of BE 251
On January 1, 2018, Frog Corporation...

Question 20

Fresh Corporation reports the following selected financial statement information at December 31, 2015:  Instructions
Calculate the debt to assets and times interest earned ratios.

Accepted Answer

The answer of Fresh Corporation reports the following selected financial...

Quiz 10: Liabilities

Putman Company had cash sales of $75,950 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale.

Which of the following statements about liabilities in incorrect? Under IFRS, companies sometimes show

BE 249 On January 1, 2018, Morris Enterprises issued 9%, 5-year bonds with a face amount of $900,000 at par. Interest is payable annually on January 1. Instructions Prepare the entries to record the issuance of the bonds and the first annual interest accrual on December 31.

On December 1, Gilman Corporation borrowed $20,000 on a 90-day, 6% note. Prepare the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note.

Identify which of the following would be classified as current liabilities as of December 31, 2017: 1. Salaries and Wages Payable 2. Bonds Payable, maturing in 2022 3. Interest Payable, due July 1, 2018 4. Sales Taxes Payable 5. Notes Payable, due January 30, 2019

The effective-interest method for amortization of bond discounts is required under

Layton Inc. is considering two alternatives to finance its construction of a new $5 million plant. (a) Issuance of 500,000 shares of common stock at the market price of $10 per share. (b) Issuance of $5 million, 9% bonds at par. Instructions

BE 253 Queen Company issued bonds with a face amount of $2,000,000 in 2015. As of January 1, 2018, the balance in Discount on Bonds Payable is $6,000. At that time, Queen redeemed the bonds at 102. Instructions Assuming that no interest is payable, make the entry to record the redemption.

During December 2017, Markowitz Publishing sold 4,500 12-month annual magazine subscriptions at a rate of $20 each. The first issues were mailed in February 2018. Prepare the entries on Markowitz's books to record the sale of the subscriptions and the mailing of the first issues.

BE 252 On January 1, 2017, Zappa Enterprises sold 8%, 20-year bonds with a face amount of $1,200,000 for $1,140,000. Interest is payable annually on January 1. Instructions Calculate the carrying value of the bond at December 31, 2017 and 2018.

Kingery Sales Company has the following selected accounts after posting adjusting entries: Instructions Prepare the current liability section of Kingery Sales Company's balance sheet, assuming $16,000 of the mortgage is payable next year.

Under IFRS, the proceeds from the issuance of convertible debt are reported as

BE 251 On January 1, 2018, Frog Corporation issued $800,000, 8%, 10-year bonds at face value. Interest is payable annually on January 1. Frog Corporation has a calendar year end. Instructions Prepare all entries related to the bond issue for 2018.

Fresh Corporation reports the following selected financial statement information at December 31, 2015: Instructions Calculate the debt to assets and times interest earned ratios.