Question 1

Phinn's Pharmacy has collected $75 in provincial sales taxes (PST) during March. If the PST must be remitted to the provincial government monthly, the entry the company will make to record the remittance for March is

Accepted Answer

The answer of Phinn's Pharmacy has collected $75 in provincial...

Question 2

Interest rates on notes and loans are usually stated as a(n)

Accepted Answer

Interest rates on notes and loans are usually stated as an annual rate. This is because the annual rate is the standardized benchmark used across the financial industry to calculate interest on loans and investments.

Question 3

A long-term note may be secured by a document called a

Accepted Answer

A long-term note may be secured by a document called a mortgage, which is a legal agreement that gives the lender the right to take possession and sell the property if the borrower fails to repay the loan. Premium is an amount that is paid over and above the face value of a security, debenture is an unsecured debt instrument, and bond may or may not be secured by a mortgage or other collateral.

Question 4

A financial liability is a

Accepted Answer

A financial liability is a contractual obligation to pay cash in the future, such as a loan or an account payable. The other options listed do not fit the definition of a financial liability.

Question 5

A retailer that collects GST (goods and services tax) is acting as an agent for the

Accepted Answer

When a retailer collects GST, they are collecting it on behalf of the federal government. The GST is a federal tax in Canada.

Question 6

Raglan Ltd. issued a five-year note payable for $85,000 on January 1, 2012. Each January the company is required to pay $17,000 on the note. How will this note be reported on the December 31, 2013 statement of financial position?

Accepted Answer

By December 31, 2013, Raglan Ltd. would have paid $34,000 ($17,000 each for 2012 and 2013), leaving $51,000 as a non-current liability. The next $17,000 due in 2014 is a current liability.

Question 7

On March 1, Broke Corp. issues a 5 year 8%, $60,000 note payable. The terms of the note include monthly blended principal and interest payments of $1,217. The entry to record the second instalment payment will include a

Accepted Answer

The second installment payment will include a debit to Notes Payable for the principal portion of the payment. The interest portion of the first payment is $400, so the principal portion is $817. For the second payment, the interest will be slightly less, and the principal portion will be $822.

Question 8

On January 1, 2012, Ganson Limited, a calendar-year company, issued $160,000 of notes payable, of which $40,000 is due on January 1 for each of the next four years. The proper statement of financial position presentation on December 31, 2012, is

Accepted Answer

On December 31, 2012, $40,000 is due within the next year, making it a current liability, while the remaining $120,000 is due in subsequent years, making it a non-current liability.

Question 9

The current portion of non-current debt should

Accepted Answer

The current portion of non-current debt represents the amount of long-term debt that is due within the next 12 months. As such, it should be classified as a current liability on the statement of financial position. This reflects the fact that the company will need to use current assets or obtain new financing to meet this obligation within the next year.

Question 10

A cash register tape shows cash sales of $2,000 and provincial sales tax (PST) of $120. The journal entry to record this information is

Accepted Answer

The answer of A cash register tape shows cash sales...

Question 11

Use the following information to answer questions 
The following totals for the month of April were taken from the payroll register of Sandhu Corp. 
-The journal entry to record the monthly payroll on April 30 would include a

Accepted Answer

The monthly payroll on April 30 would include a debit to Salaries Expense for the total of all employee earnings ($16,670) plus employer payroll taxes ($2,830), which equals $19,500. This corresponds to option A. The credit to Salaries Payable would only be used if some of the earnings were not paid out in the current pay period. The $15,300 and $12,989 represent only part of the total earnings and do not include the employer payroll taxes.

Question 12

Harmonized Sales Tax (HST) collected by a retailer are expenses

Accepted Answer

HST collected by a retailer is considered an expense of the customers because it is a tax charged to customers on the purchase of goods and services, which the retailer then remits to the government.

Question 13

Use the following information to answer questions 
The following totals for the month of April were taken from the payroll register of Sandhu Corp. 
-Assuming Sandhu Corp is also required to remit 140% of the employees' EI withholdings as their share of employee benefits, the journal entry to record the accrual of the employer's portion of EI would include a

Accepted Answer

The employer's portion of EI is 140% of the employees' withholdings. If the employees' EI withholdings are $347, then the employer's portion would be 1.4 times $347, which equals $486. Therefore, the journal entry would include a credit to EI Payable of $486.

Question 14

A five-year, 6%, $50,000 note payable is issued on January 1. Terms include fixed annual principal payments of $10,000, plus interest on the outstanding balance. The entry to record the first instalment payment will include a

Accepted Answer

The first installment payment includes a reduction of the principal by $10,000, which is recorded as a debit to Notes Payable.

Question 15

On March 1, Broke Corp. issues a 5 year, 8%, $60,000 note payable. The terms of the note include monthly blended principal and interest payments of $1,217. The entry to record the first instalment payment will include a

Accepted Answer

The first installment payment includes both principal and interest. The interest expense for the first month is calculated as 8% annual interest on the $60,000 note, divided by 12 months, which equals $400. Thus, the entry will include a debit to Interest Expense of $400.

Question 16

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

Accepted Answer

The answer of When a long-term note payable with a...

Question 17

As blended principal and interest payments are made on a long-term loan,

Accepted Answer

The answer of As blended principal and interest payments are...

Question 18

Use the following information to answer questions 
The following totals for the month of April were taken from the payroll register of Sandhu Corp. 
-The journal entry to record payment of the net payroll would include a

Accepted Answer

The answer of Use the following information to answer questions...

Question 19

Use the following information to answer questions 
The following totals for the month of April were taken from the payroll register of Sandhu Corp. 
-The journal entry to record the accrual of the employee's portion of Canada Pension Plan (CPP) would include a

Accepted Answer

The answer of Use the following information to answer questions...

Question 20

Provincial sales taxes (PST) collected by a retailer are reported as

Accepted Answer

PST collected by a retailer is a current liability because it represents sales taxes collected from customers but not yet remitted to the government. It is not reported as revenues because it is not earned by the retailer, but rather collected on behalf of the government. It is also not reported as an expense because it is not a cost of doing business, but rather a tax collected. It is also not a non-current liability as it is expected to be remitted in the short term.

Quiz 10: Reporting and Analyzing Liabilities

Phinn's Pharmacy has collected $75 in provincial sales taxes (PST) during March. If the PST must be remitted to the provincial government monthly, the entry the company will make to record the remittance for March is

Interest rates on notes and loans are usually stated as a(n)

A long-term note may be secured by a document called a

A financial liability is a

A retailer that collects GST (goods and services tax) is acting as an agent for the

Raglan Ltd. issued a five-year note payable for $85,000 on January 1, 2012. Each January the company is required to pay $17,000 on the note. How will this note be reported on the December 31, 2013 statement of financial position?

On March 1, Broke Corp. issues a 5 year 8%, $60,000 note payable. The terms of the note include monthly blended principal and interest payments of $1,217. The entry to record the second instalment payment will include a

On January 1, 2012, Ganson Limited, a calendar-year company, issued $160,000 of notes payable, of which $40,000 is due on January 1 for each of the next four years. The proper statement of financial position presentation on December 31, 2012, is

The current portion of non-current debt should

A cash register tape shows cash sales of $2,000 and provincial sales tax (PST) of $120. The journal entry to record this information is

Use the following information to answer questions The following totals for the month of April were taken from the payroll register of Sandhu Corp. -The journal entry to record the monthly payroll on April 30 would include a

Harmonized Sales Tax (HST) collected by a retailer are expenses

A five-year, 6%, $50,000 note payable is issued on January 1. Terms include fixed annual principal payments of $10,000, plus interest on the outstanding balance. The entry to record the first instalment payment will include a

On March 1, Broke Corp. issues a 5 year, 8%, $60,000 note payable. The terms of the note include monthly blended principal and interest payments of $1,217. The entry to record the first instalment payment will include a

When a long-term note payable with a fixed interest rate has fixed principal payments, it means that

As blended principal and interest payments are made on a long-term loan,

Use the following information to answer questions The following totals for the month of April were taken from the payroll register of Sandhu Corp. -The journal entry to record payment of the net payroll would include a

Use the following information to answer questions The following totals for the month of April were taken from the payroll register of Sandhu Corp. -The journal entry to record the accrual of the employee's portion of Canada Pension Plan (CPP) would include a

Provincial sales taxes (PST) collected by a retailer are reported as