Question 1

Westwood Company borrowed $202,500 cash on January 1, 2019, by signing an 8% mortgage note that is to be repaid in 10 equal annual end-of-year payments. The first payment is due on December 31, 2019.
The journal entry to record the first payment will include:

Accepted Answer

Computation of mortgage note payments:
 11ee7640_e1c4_a7b4_90da_cd2d367b694c_TBCB1007_00 Interest expense: $202,500 x 8% = $16,200
Journal entry to record the first payment:
11ee7948_c98d_e5c2_88d3_77fc14935fb2_TBCB1007_11

Question 2

On January 1, Alicia Company borrowed $30,000 cash by signing an 8 year, 7% mortgage note that requires equal total payments on December 31 of each year.
The balance in the Note Payable account after the first payment is made is:

Accepted Answer

11ee7640_e1c4_cec5_90da_6fbd4fe2b34e_TBCB1007_00 Computation of mortgage note payments:
 11ee7640_e1c4_cec6_90da_b151995be2f2_TBCB1007_00

Question 3

On January 1, 2019 Tracey Sisters Company borrowed $90,000 cash by signing an 8 year, 7% mortgage note that requires equal total payments on December 31 of each year.
The balance in the Mortgage Note Payable account after the first payment is made is:

Accepted Answer

11ee7640_e1c4_cec7_90da_f753e393e3ed_TBCB1007_00 Computation of mortgage note payments:
 11ee7640_e1c4_cec8_90da_5bf70607f032_TBCB1007_00

Question 4

Eva Industries issued bonds with a face value of $7,000,000 and a coupon rate of 5% paid semiannually for 4 years. The market rate of interest is 6%.
How much is the market value of the bond using a present value table?

Accepted Answer

11ee7640_e1c4_f5d9_90da_ddd3bbea6bf3_TBCB1007_00

Question 5

Brahtz Industries issued bonds with a face value of $21,000,000 and a coupon rate of 5% paid semiannually for 4 years. The market rate of interest is 6%.
How much is the market value of the bond using a present value table?

Accepted Answer

11ee7640_e1c4_f5da_90da_0bf9bddd5ff6_TBCB1007_00

Question 6

Pendergraf Manufacturing leased some manufacturing equipment for five years on July 1, 2020. The equipment has an expected life of 10 years. The monthly lease payments are $8,500 ($510,000 in total). At the end of the lease term, Pendergraf has a right to purchase the equipment for $1,000. The present value of the lease payments at 5% is $451,200.
The entry to record the lease in July will include:

Accepted Answer

The lease is recorded as an asset at the present value of the lease payments.

Question 7

On June 30, one year before maturity, Boat Shoes, Inc. retired $600,000 of its 10% bonds payable at 96. The bond's book value on June 30 is $495,000. Bond interest is presently paid up to the date of retirement. 
How much is the gain or loss on the retirement of these bonds?

Accepted Answer

The answer of On June 30, one year before maturity,...

Question 8

Calculate the interest accrued for each of the following notes payable owed by Boundas Resorts as of December 31, 2019:

Accepted Answer

The answer of Calculate the interest accrued for each of...

Question 9

Kenyon Company issued $1,050,000 of 7%, 20-year bonds at 104 on January 1, 2008. Interest is payable semi-annually on July 1 and January 1. Through January 1, 2019, Kenyon amortized $25,500 of the bond premium. On January 1, 2019, Kenyon retires the bond at 101 (after making the interest payment on that date). 
Indicate the journal entry for the bond retirement on January 1, 2019.

Accepted Answer

The answer of Kenyon Company issued $1,050,000 of 7%, 20-year...

Question 10

Fergus Fabricators, a manufacturing company, paid $20,400,000 to retire $24,000,000 in 7% notes due in 5 years. The book value of the notes was $19,200,000 at the date of retirement. 
How much is the net gain or loss on the redemption of these notes? Prepare the journal entry to record the transaction.

Accepted Answer

The answer of Fergus Fabricators, a manufacturing company, paid $20,400,000...

Question 11

Modern Telephone billed a customer $5,089.20, an amount that includes an excise tax of 10% and a sales tax of 6%. 
a. What amount of revenue should be recorded?
b. Present a general journal entry to record this transaction on Modern Telephone's books.

Accepted Answer

The answer of Modern Telephone billed a customer $5,089.20, an...

Question 12

The following data are taken from Duncan Wayneright Corporation's monthly payroll for August 2019: 
  Assume that the company is subject to a 2.7% state unemployment tax and a 0.8% federal unemployment tax.
Record the general journal entry to:
a. Accrue the payroll.
b. Accrue the employer's payroll taxes.

Accepted Answer

The answer of The following data are taken from Duncan...

Question 13

Murnau, Inc. has $1,400 working capital and $3,300 of current assets. What is the firm's current liabilities?

Accepted Answer

The answer of Murnau, Inc. has $1,400 working capital and...

Question 14

Langley Enterprises leases a semi-trailer truck from Rogers Rental for 10 years on January 1, 2020. Langley agrees to make quarterly payments of $4,000. The first payment is due March 31, 2020. At the end of the lease term, Langley agrees to pay Rogers $2,500. The market value of the truck is expected to be $25,000 at the end of the lease. Langley uses 8% as its discount rate. 
What is the entry to record the lease on January 1?

Accepted Answer

The answer of Langley Enterprises leases a semi-trailer truck from...

Question 15

Selected balance sheet and income statement information for the office supply retailer, Organized Plus Co., for 2019 through 2017 follows:
  a. Compute the current ratio for each year and discuss any trends.
b. Compute times-interest-earned ratio for each year and discuss any trends.

Accepted Answer

The answer of Selected balance sheet and income statement information...

Question 16

Broad Horizons, Inc. plans to issue 20-year notes with a face value of $14,400,000 and an annual coupon rate of 5.5%. The market rate of interest is 4%. Interest payments will be made semi-annually. 
a. Compute the market value of the bonds.
b. Assume the market rate remains at 4% after 5 years. How much cash will Bright Future, Inc. need to pay off the notes at this time?

Accepted Answer

The answer of Broad Horizons, Inc. plans to issue 20-year...

Question 17

Compute the present value for each of the following amounts.
a. $150,000 received in 8 years if annual interest rate is: (1) 10% compounded annually or (2) 10% compounded semiannually
b. $15,000 received at the end of each year for the next 4 years if the money is worth 8% per year compounded annually

Accepted Answer

The answer of Compute the present value for each of...

Question 18

Investment Company issues $1,500,000 of 8% bonds that pay interest semiannually and mature in 10 years. Compute the bonds' issue price assuming that the bonds' market interest rate is:
a. 6% per year compounded semiannually
b. 10% per year compounded semiannually

Accepted Answer

The answer of Investment Company issues $1,500,000 of 8% bonds...

Question 19

Waveland Corporation issued $120,000,000 in bonds which mature in 5 years. The bonds pay an annual coupon rate of 10%. Interest payments are made semi-annually. The current market rate for similar bonds is 8%.
a. At what price should this bond offering sell?
b. Create a table showing the amortized premium or discount the first three years of the bonds.
c. How much is the book value of the bonds at the end of the first year (2 payments)?

Accepted Answer

The answer of Waveland Corporation issued $120,000,000 in bonds which...

Quiz 10: Accounting for Liabilities

Westwood Company borrowed $202,500 cash on January 1, 2019, by signing an 8% mortgage note that is to be repaid in 10 equal annual end-of-year payments. The first payment is due on December 31, 2019. The journal entry to record the first payment will include:

On January 1, Alicia Company borrowed $30,000 cash by signing an 8 year, 7% mortgage note that requires equal total payments on December 31 of each year. The balance in the Note Payable account after the first payment is made is:

On January 1, 2019 Tracey Sisters Company borrowed $90,000 cash by signing an 8 year, 7% mortgage note that requires equal total payments on December 31 of each year. The balance in the Mortgage Note Payable account after the first payment is made is:

Eva Industries issued bonds with a face value of $7,000,000 and a coupon rate of 5% paid semiannually for 4 years. The market rate of interest is 6%. How much is the market value of the bond using a present value table?

Brahtz Industries issued bonds with a face value of $21,000,000 and a coupon rate of 5% paid semiannually for 4 years. The market rate of interest is 6%. How much is the market value of the bond using a present value table?

On June 30, one year before maturity, Boat Shoes, Inc. retired $600,000 of its 10% bonds payable at 96. The bond's book value on June 30 is $495,000. Bond interest is presently paid up to the date of retirement. How much is the gain or loss on the retirement of these bonds?

Calculate the interest accrued for each of the following notes payable owed by Boundas Resorts as of December 31, 2019:

Modern Telephone billed a customer $5,089.20, an amount that includes an excise tax of 10% and a sales tax of 6%. a. What amount of revenue should be recorded? b. Present a general journal entry to record this transaction on Modern Telephone's books.

Murnau, Inc. has $1,400 working capital and $3,300 of current assets. What is the firm's current liabilities?

Selected balance sheet and income statement information for the office supply retailer, Organized Plus Co., for 2019 through 2017 follows: a. Compute the current ratio for each year and discuss any trends. b. Compute times-interest-earned ratio for each year and discuss any trends.

Investment Company issues $1,500,000 of 8% bonds that pay interest semiannually and mature in 10 years. Compute the bonds' issue price assuming that the bonds' market interest rate is: a. 6% per year compounded semiannually b. 10% per year compounded semiannually