CH 10 ACC

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

increased; the Interest Payable account is increased.

Unearned Rent Revenue is

reported as a current liability.

Which of the following is not a typical current liability? A) Prepaid Rent B) Federal unemployment taxes payable C) Unearned passenger ticket revenue D) Current maturities of long-term debt

A) Prepaid rent

On December 30, 2017, a company issued a note payable of $50,000, of which $10,000 will be repaid each year. What is the proper classification of this note on the December 31, 2017 balance sheet? A) $10,000 current liability; $40,000 long-term liability B) $50,000 current liability C)$50,000 long-term liability D) $10,000 long-term liability; $40,000 current liability

A)$10,000 current liability; $40,000 long-term liability

What term is used for bonds that have specific assets pledged as collateral? A)Secured bonds B)Discount bonds C)Convertible bonds D)Callable bonds

A)Secured bonds Secured bonds are those that have specific assets of the issuer pledged as collateral.

Which one of the following is not a typical current liability? A) FICA taxes Payable B) Bonds Payable C) Sales Taxes Payable D) Unearned Revenue

B) Bonds Payable

The cash register tape indicates cash sales are $2,000 and sales taxes are $155. What journal entry is needed to record this information? Cash 2,000 Sales 2,000 Cash 2,000 Sales Tax Expense 155 Sales 1,155 Cash 2,155 Sales 2,155 Cash 2,155 Sales 2,000 Sales Taxes Payable 155

Cash 2,155 Sales 2,000 Sales Taxes Payable 155 The sales taxes obligation must be recognized separately as sales taxes are paid by the buyer of the product or service and must be submitted by the retailer to the governmental agency imposing them.

On January 1, 2017, Cullumber Company, a calendar-year company, issued $918000 of notes payable, of which $230000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2017, is:

Current liabilities, $230000; Long-term Debt, $688000.

Which of the following is not a measure of liquidity?

Debt to total assets ratio measures solvency which is the the ability of a company to survive over a long period of time.

Which of the following most likely would be classified as a current liability? Dividends payable Three-year notes payable Mortgage payable as a single payment in 10 years Bonds payable in 5 years

Dividends payable

Pima Co. has the following selected accounts after posting adjusting entries: Accounts payable $14,000 6-month, 8%, note payable 24,000 Income tax expense 5,000 Accumulated depreciation-building 23,000 3-year, 10% note payable 200,000 Salaries and wages payable 28,000 Mortgage payable ($20,000 due next year) 1,000,000 Rent payable 6,000 Current assets are $256,000 at year-end. How much is Pima's current ratio at year-end?

Liabilities are classified as current if they will be paid with current assets within one year or the current operating cycle, whichever is longer. Current liabilities = $14,000 + $24,000 + $28,000 + $20,000 + $6,000 = $92,000 Current ratio = $256,000/$92,000 = 2.78

Andre Company collected $4,515 from cash sales to customers, which includes both sales revenue and 5% sales taxes. How much should be recognized as sales revenue? A)$4,515 B)$4,000 C)$4,289.25 D)$4,300

The amount of sales can be computed by dividing total cash received by one plus the sales tax rate of 5%. The computation is as follows: $4,515/1.05 = $4,300.

In a recent year, Day Corporation had net income of $150,000, interest expense of $30,000, and tax expense of $20,000. What was Day Corporation's times interest earned for the year?

Times interest earned is computed by dividing income before interest and taxes by interest expense. For Day Corporation, the computation is ($150,000 + $30,000 + $20,000) / $30,000, or 6.67.

The amount of sales tax collected by a retail store when making sales is

a current liability.

The current portion of long-term debt should

be reclassified as a current liability.

A retail store credited the 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 account amounted to $262500, what is the amount of the sales taxes owed to the taxing agency?

$12500

Kingbird, Inc. does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $29044. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes?

$1644