Question 1

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

Accepted Answer

The answer of On March 21,2019,the bond accounts of Fitzhugh...

Question 2

When a bond is matured,the carrying value always equals the face value.

Accepted Answer

When a bond is matured, it means that the bond has reached the end of its term and the issuer is required to pay the principal or face value of the bond to the bondholder. Therefore, the carrying value (or book value) of the bond, which represents the value of the bond on the issuer's balance sheet, will always equal the face value at maturity.

Question 3

Callable bonds are bonds that the issuer may call and pay off at a specified price whenever the issuer wants.

Accepted Answer

Callable bonds give the issuer the option to call and pay off the bond at a specified price before the maturity date.

Question 4

When bonds are retired at maturity,assuming the last interest payment has already been recorded,the journal entry includes a debit to the Bonds Payable account and a credit to the Cash account.

Accepted Answer

When bonds are retired at maturity, the issuer will pay back the full face value of the bond to the bondholders, which includes any remaining interest owed. Therefore, the Bonds Payable account is debited for the full face value of the bond, and the Cash account is credited for the same amount. Any interest payments made prior to maturity will have already been recorded as an expense and a reduction to the Bonds Payable account.

Question 5

England Corporation issued a $400,000,5.5%,10-year bonds payable at 101 on January 1,2009.The bonds are retired on January 1,2019.Prepare the journal entries on the date of issuance and at the date of retirement.Omit explanations.

Accepted Answer

The answer of England Corporation issued a $400,000,5.5%,10-year bonds payable...

Question 6

An alternative to calling the bonds is to purchase any available bonds in the open market at their current market price.

Accepted Answer

This is true. Instead of calling the bonds, a company can choose to purchase any available bonds on the open market at their current market price. This can be a cost-effective way for the company to retire debt if the market price of the bonds is lower than their call price.

Question 7

The balance sheet shows the balance in Bonds Payable plus any discount or minus any premium.

Accepted Answer

The balance sheet shows the net carrying amount of Bonds Payable, which is the face value of the bonds minus any unamortized discount or plus any unamortized premium.

Question 8

FICA-OASDI Taxes Payable would normally be shown on the balance sheet under long-term liabilities.

Accepted Answer

FICA-OASDI (Federal Insurance Contributions Act - Old Age, Survivors, and Disability Insurance) taxes are considered payroll or employment taxes and are generally classified as current liabilities on the balance sheet. They are payable to the government within a short period of time, typically within a few weeks or months after being incurred. Long-term liabilities are obligations that are not due within the next twelve months or do not have a set due date.

Question 9

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.

Accepted Answer

The answer of On March 21,2019,the bond accounts of Pet...

Question 10

Refer to the following list of liability balances at December 31,2019.  What is the total amount of long-term liabilities?
A)$55,000
B)$109,000
C)$94,000
D)$40,000

Accepted Answer

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Question 11

On July 1,2019,Michigan Company has bonds with balances as shown below.  Premium on Bonds Payable
 If the company retires the bonds for $74,150,what will be the effect on the income statement?
A)gain on retirement of $6950
B)loss on retirement of $6950
C)gain on retirement of $650
D)loss on retirement of $650

Accepted Answer

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Question 12

The Current Portion of Long-Term Notes Payable would normally be shown on the balance sheet under current liabilities.

Accepted Answer

The Current Portion of Long-Term Notes Payable is a short-term liability and is therefore included in the current liabilities section of the balance sheet.

Question 13

On July 1,2019,Montana Company has bonds with balances as shown below.  Discount on Bonds Payable
 If the company retires the bonds for $71,150,what will be the effect on the income statement?
A)loss on retirement of $4750
B)gain on retirement of $4750
C)sales revenue of $66,400
D)no effect on net income

Accepted Answer

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Question 14

Scotland,Inc.issued a $5,000 face value,10%,five-year bond at 98.What will be the journal entries at the maturity of the bond? The bonds have semiannual interest,and the company uses the straight-line method of amortization.Omit explanations.

Accepted Answer

The answer of Scotland,Inc.issued a $5,000 face value,10%,five-year bond at...

Question 15

The United Way Payable account would normally be shown on the balance sheet under current liabilities.

Accepted Answer

The United Way Payable account represents an obligation to pay the United Way, which is a current liability. Therefore, it would be shown on the balance sheet under current liabilities.

Question 16

Refer to the following list of liability balances at December 31,2018.  What is the total amount of current liabilities?
A)$35,380
B)$27,880
C)$27,480
D)$26,280

Accepted Answer

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Question 17

When bonds are retired at maturity ________.
A)the bondholders are paid the face value plus the unamortized premium or less the unamortized discount
B)the carrying value equals the face value plus the unamortized premium or less the unamortized discount
C)the carrying value always equals the face value
D)the entry to retire the bonds may include a gain or loss on retirement of bonds

Accepted Answer

When bonds are retired at maturity, the carrying value of the bonds equals the face value because any premium or discount associated with the bond issuance would have been fully amortized by the maturity date.

Question 18

Federal Unemployment Taxes Payable is typically shown on the balance sheet under the long-term liabilities section.

Accepted Answer

Federal Unemployment Taxes Payable is typically shown under current liabilities on the balance sheet because it is usually due within one year.

Question 19

The Employee Bonus Payable would normally be shown on the balance sheet under long-term liabilities.

Accepted Answer

The Employee Bonus Payable would be shown on the balance sheet under current liabilities.

Question 20

The main reason companies retire bonds prior to their maturity date is to relieve the pressure of paying interest payments.

Accepted Answer

Retiring bonds prior to their maturity date allows companies to stop making interest payments, thus relieving the pressure of these payments on their finances.

Quiz 14: Long-Term Liabilities

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

When a bond is matured,the carrying value always equals the face value.

Callable bonds are bonds that the issuer may call and pay off at a specified price whenever the issuer wants.

When bonds are retired at maturity,assuming the last interest payment has already been recorded,the journal entry includes a debit to the Bonds Payable account and a credit to the Cash account.

England Corporation issued a $400,000,5.5%,10-year bonds payable at 101 on January 1,2009.The bonds are retired on January 1,2019.Prepare the journal entries on the date of issuance and at the date of retirement.Omit explanations.

An alternative to calling the bonds is to purchase any available bonds in the open market at their current market price.

The balance sheet shows the balance in Bonds Payable plus any discount or minus any premium.

FICA-OASDI Taxes Payable would normally be shown on the balance sheet under long-term liabilities.

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.

Refer to the following list of liability balances at December 31,2019. What is the total amount of long-term liabilities?

On July 1,2019,Michigan Company has bonds with balances as shown below. Premium on Bonds Payable If the company retires the bonds for $74,150,what will be the effect on the income statement?

The Current Portion of Long-Term Notes Payable would normally be shown on the balance sheet under current liabilities.

On July 1,2019,Montana Company has bonds with balances as shown below. Discount on Bonds Payable If the company retires the bonds for $71,150,what will be the effect on the income statement?

Scotland,Inc.issued a $5,000 face value,10%,five-year bond at 98.What will be the journal entries at the maturity of the bond? The bonds have semiannual interest,and the company uses the straight-line method of amortization.Omit explanations.

The United Way Payable account would normally be shown on the balance sheet under current liabilities.

Refer to the following list of liability balances at December 31,2018. What is the total amount of current liabilities?

When bonds are retired at maturity ________.

Federal Unemployment Taxes Payable is typically shown on the balance sheet under the long-term liabilities section.

The Employee Bonus Payable would normally be shown on the balance sheet under long-term liabilities.

The main reason companies retire bonds prior to their maturity date is to relieve the pressure of paying interest payments.