Review Exam 3 Quizes

both a and c above

Contingencies must be accrued as liabilities if

result in an overstated net income

Failure to record a liability probably will

both a and b

Notes payable provide the lender

$5,535,000

When the market rate of interest was 9%, Kennesaw Van Lines leased several transfer trucks. The annual payments are $1,000,000 and the life of the lease is 8 years. It is estimated that the useful life of the trucks is 10 years. The present value interest factors for 9% are provided below: n PV($1) PV(annuity) 8 0.502 $5.535 9 0.46 $5.995 10 0.422 $6.418 The company should record the acquisition of the trucks (rounded to nearest thousand) as an asset with a cost of:

bonds will be issued at a discount

When the yield/market rate of interest is greater than the contractual/stated rate of interest

Interest expense decreases and reduction in principal increases

Which of the following best describes the behavior over time of the components of equal mortgage payments?

debited to the Land account

The cost of tearing down a building situated on land just purchased should be

debenture bond

An unsecured bond is also known as a

$90,700

Elway Company purchases land for $85,000 cash. Elway assumes $2,500 in property taxes due on the land. The title and attorney fees totaled $1,000. Elway has the land graded for $2,200. They paid $10,000 for paving of a parking lot. What amount does Elway record as the cost for the land?

$180,000

Focal Point Engineering purchased a trademark at the beginning of 2017 for $200,000. Although the trademark's legal life is 20 years, economic benefits were expected for only 10 years. Also, during 2017, the company incurred research and development costs of $200,000. The book value of the trademarks at December 31, 2017, is

Social security tax payable will be credited in the amount of $6,200

Gainesville Truck Center has a weekly payroll of $100,000 for its employees. Federal and state income taxes are withheld in the amounts of $17,000 and $4,000, respectively, and FICA taxes are withheld at a mandatory rate of 7.65% (6.2% for Social Security and 1.45% for Medicare). In addition, the federal and state unemployment taxes are applied at rates of 2% and 5%, respectively. Which of the following statements is true regarding the entry to record wages and the related liabilities?

All of the above

Liabilities are

$250

On January 1, 2017, $1,000,000, 10-year, 10% bonds, were issued at 97. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is

$6,250

On January 1, a company vehicle with a useful life of eight years and a residual value of $1,000 was purchased for $25,000. What is the depreciation expense in year 1 using the double-declining-balance method?

interest payable by $1,050

On October 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, a year-end adjusting entry is required to increase

copyright

The exclusive right to reproduce and sell a literary, artistic, or musical work is called a

$6,250

A company issues $200,000 of 20-year, 6 percent bonds at 95. If interest is paid semiannually, what is the amount of bond interest expense recorded (assuming straight-line amortization) on any interest date?

$160,000

A company purchases a coal mine for $1,000,000. It estimates that the mine contains 5,000,000 tons of coal and has a five-year life with no salvage value. If the company extracts and sells 800,000 tons during the first year, how much accumulated depletion should be recorded?

debit to Unamortized Bond Premium

A corporation issues bonds that pay interest each April 1 and October 1. The corporation's December 31 adjusting entry could include a

0.55

Keystone Corporation's balance sheet showed the following liability and stockholders' equity amounts: Current Liabilities, $100,000; Bonds Payable, $150,000; Capital Lease Obligations, $20,000; Deferred Income Tax Liability, $5,000; and total stockholders' equity, $500,000. The debt-to-equity ratio is

$3,000

On January 1, a company vehicle with a useful life of eight years and a residual value of $1,000 was purchased for $25,000. What is the depreciation expense in year 3 under straight-line depreciation?

A pending lawsuit

Which of the following involves a contingent liability?

Painting the office walls

Which of the following is not a capital expenditure?

It should be expensed in the year acquired

Which of the following statements is not true about goodwill?

$15,000

A company's employees earn $5,000 per day, work 5 days per week (Monday through Friday), and get paid each Friday. If the previous payday was January 26 and the accounting period ends on January 31, what is the ending balance in the wages payable account?

$800,000

A graphics design company issued bonds in the amount of $1,000,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what would be the total amount of interest paid over the life of the bonds?

$320

During July, Audio City sold 200 radios for $50 each. Each radio had cost Audio City $32 to purchase and carried a two-year warranty. If 5 percent typically need to be replaced over the warranty period and one actually is replaced during July, for what amount in July should Audio City debit Product Warranty Expense?

debit to Loss on Sale of Asset for $800

An asset that costs $7,000 and has accumulated depreciation of $5,200 is sold for $1,000. The ensuing journal entry would include a

$25,000

Assume the tax rate in your state is 8%. Your cash register does not have a key for sales tax. However, the total amount of cash received for sales and sales tax during the month of June was $27,000. Sales for the month of June totaled

debit to the Interest Expense account for $5,000

Crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a