241 exam 3

d

A company uses the effective interest method to amortize a bond discount. Which of the following statements is true regarding the interest expense that is recognized each year? a - It will be greater than the interest payment. b - It will increase from year to year. c - It will remain the same from year to year. d - It will be greater than the interest payment and it will also increase from year to year.

b

A copy machine cost $36,000 and now has accumulated depreciation of $34,000. If the company sells the machine for $6,000 then they will record: a. A loss of $4,000 b. A gain of $4,000 c. A gain of $6,000 d. A gain of $2,000

d

A truck was purchased for $25,000. It has a six-year life and a $4,000 salvage value. Using straight-line depreciation, what is the asset's carrying value (book value) after 3 years? a.$12,500 b.$25,000 c.$21,000 d.$14,500.

d

Amortization of a bond discount will do which of the following to the issuer's financial statements? A. Decrease cash flows from financing activities. B. Increase long-term liabilities. C. Increase expenses. D. Both B and C

b

At the end of the current accounting period, Ringgold Company recorded depreciation of $15,000 on its equipment. What is the effect of this entry on the company's balance sheet? a - Decrease assets and increase liabilities b - Decrease stockholders' equity and decrease assets c - Decrease assets and increase stockholders' equity d - Decrease stockholders' equity and increase liabilities

c

Bates Company issued a $50,000, 6% 5-year term note to People's Bank on January 1, 2015.The note called for equal annual payments of $11,870. How much interest expense wouldBates report on its 2016 income statement? A. $3,000.00 B. $11,870.00 C. $2,467.80 D. $2,820.00

a

Benson Company issued bonds with a face value of $400,000, a 10% stated rate of interest, and a10-year term. The bonds were issued on January 1, 2016, and Benson uses the effective interest method of amortization. The market rate of interest on the date of issue was 8%. Interest is paid annually on December 31. Assuming Benson issued the bond for $431,940, the amount of interest expense appearing on the2018 income statement would be: A. $33,649. B. $20,000. C. $34,120. D. $46,350

c

Benson Company issued bonds with a face value of $400,000, a 10% stated rate of interest, and a10-year term. The bonds were issued on January 1, 2016, and Benson uses the effective interest method of amortization. The market rate of interest on the date of issue was 8%. Interest is paid annually on December 31. Assuming Benson issued the bonds for $431,940, the carrying value of the bonds on theDecember 31, 2018 balance sheet would be closest to: A. $420,615. B. $426,495. C. $414,264. D. $404,800.

b

Bonds issued at a premium always have a. Interest expense equal to interest payments b. Interest expense less than interest payments c. Interest expense greater than interest payments d. None of the above

d

Brown Company issues $125,000 of bonds at face value on January 1. The bonds carry a 6%annual stated rate of interest. Interest is payable in cash on December 31 of each year. Which of the following reflects the financial statement effects of the first interest payment?

a

Callahan Company recorded an event in which current assets decreased, long-term liabilities decreased, and cash flows from financing activities decreased. There were no other changes. Which of the following could have caused this? A. Callahan redeemed a bond issued at face value on its maturity date. B. Callahan called a bond issued at face value at a call price of 102. C. Callahan made a payment on an installment note. D. Any of the above

d

Chico Company borrowed $40,000 on a four-year, 8% installment note. How will Chico record the issuance of this note?

d

Curry Company issued $100,000 of bonds at face value. The bonds carried a 5% stated rate of interest and a 20-year term to maturity. Which of the following is a true statement? A. Interest expense on the bonds will decrease over the life of the bonds. B. The carrying value of the bonds will decrease over time. C. Like long-term notes, the bonds will be paid off with the last annual payment. D. None of the above is true.

b

19. When a company amortizes a bond premium, A. the bonds payable account decreases. B. the carrying value of the bond decreases. C. the carrying value of the bond increases. D. Both A and B.

c

A company uses the effective interest method to amortize a bond premium. Which of the following statements is true regarding the carrying value of the bond? a - The carrying value will decrease by equal amounts each year. b - The carrying value will decrease by smaller amounts each year. c - The carrying value will decrease by larger amounts each year. d - The carrying value will be lower than the face value of the bond until maturity.

b

A copyright is obtained for what becomes a very successful book. The publisher expects the book to generate sales for 10 years. The copyright should be amortized over a.2 to 4 years. b.10 years. c.40 years. d.the author's life plus 50 years

b

If a bond discount is amortized using the effective interest method, A. interest expense will decrease from year to year. B. interest expense will increase from year to year. C. interest expense will remain constant from year to year. D. interest expense may increase or decrease from year to year.

b

Johansen Company issued a bond at a discount. Which of the following shows how the issuance of the bonds affects the elements of the financial statements?

c

Joseph Company calls $100,000 of bonds that were issued at face value for a call price of102. What effect will the event have on Joseph's financial statements? A. Assets will decrease by $100,000. B. Long-term liabilities will decrease by $102,000. C. Net income will decrease by $2,000. D. All of the above.

b

On January 1, Year 1, the Platte Corporation issues a 5-year note payable for $5,000. The interest rate is 5% and the annual payment of $1,156, due each December 31, includes both interest and principal. Which of the following shows the effect of the December 31, Year 1 payment?

b

Stephanie's Fashions sold $2,000 of merchandise on a given day, plus 5% sales tax. All sales were on account.How should Stephanie's Fashions record the sales transactions? a. Accounts Receivable $2,100 Sales Revenue $2,100 b. Accounts Receivable $2,100 Sales Tax Payable $100 Sales Revenue $2,000 c. Accounts Receivable $2,100 Sales Tax Expense $100 Sales Revenue $2,000 d. Accounts Receivable $2,000 Sales Revenue $2,000

date, int exp, cash pymt, prem. amort, b/p, prem., cv

amortize bond premium table headings

b

ates Company issued a $50,000, 6% 5-year term note to People's Bank on January 1, 2015.The note called for equal annual payments of $11,870. What is the carrying value of the note after the December 31, 2016 payment? A. $41,130.00 B. $31,727.80 C. $38,130.00 D. $26,260.00

cash pymt - int exp

installment table: principle requirement

d

sikes Company experienced an accounting event that was recorded in its general journal as indicated below: Warranties Payable. xxx Cash xxx Which of the following reflects how this event affects the company's financial statements?

int exp, int/p 2700 ((0.09)(4/12)

what accounts - hsc must accrue 4 months of the int exp from year one which was 90,000 at 9% what is the number?

b

.The sale for $2,000 of equipment that cost $8,000 and has accumulated depreciation of $6,700 would result in a a.gain of $2,000. b.gain of $700. c.loss of $700. d.loss of $1,300

c

12. A company has the following assets: Buildings and Equipment, less accumulated depreciation of $5,000,000 25,000,000 Patents 2,400,000 Trademarks 10,000,000 Land 12,000,000 Goodwill 2,000,000 Cash 8,000,000 The total amount reported under Property, Plant, and Equipment would be a. $25,000,000. b. $37,000,000. c. $47,000,000. d. $45,000,000.

d

12.Which of the following statements about goodwill is true? a.On the purchase date, the amount of goodwill is measured by subtracting the fair market value of assets acquired from the amount paid for those assets. b.The amount of goodwill is recorded as an asset. c.Recording impairment of goodwill reduces the amount of net income. d.All of the above

a

1The calculation of depreciation using the declining-balance method a. ignores salvage value in determining the amount to which a constant rate is applied. b. multiplies a constant percentage times the previous year's depreciation expense . c. yields an increasing depreciation expense each period. d. multiplies a declining percentage times a constant book value.

c

2. Land is generally shown on the balance sheet under a. Intangibles. b. Investments. c. Property, Plant, and Equipment. d. Current Assets.

b

20. Wheaton Company issues $200,000 of 10-year, 6% bonds for 98. Which of the following is true? A. Wheaton will recognize $120,000 of interest expense over the life of the bonds. B. Wheaton will recognize $124,000 of interest expense over the life of the bonds. C. Wheaton will recognize $116,000 of interest expense over the life of the bonds. D. Wheaton will recognize $118,000 of interest expense over the life of the bonds.

a

4. A plant asset with a cost of $900,000 and accumulated depreciation of $800,000 is sold for $80,000. What is the amount of the gain or loss on disposal of the plant asset? a. $20,000 loss. b. $80,000 loss. c. $80,000 gain. d. $20,000 gain.

b

6. Equipment with a cost of $450,000 has an estimated salvage value of $30,000 and an estimated life of 4 years or 10,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,700 hours? a. $112,500. b. $105,000. c. $113,400. d. $108,750

recognize

contingent liability is probable and estimable then ____ in fin statement

disclose in notes

contingent liability is reasonably probable then ___ financial statement

don't recognize

contingent liability is remote then __ in fin statement

cash, a/r, inv, pp rent, supplies, short term/r

current assets include

a/p, short term n/p, wages/p, taxes/p, interest/p

currnet liab include

no

do we depreciate land and buildings

d

fi a company issues bonds at a premium, A. the market rate of interest must be lower than the stated rate. B. the carrying value of the bonds will decrease over time. C. interest expense will be lower than the interest payment .D. All of the above.

d

if a bond is issued at 104, A. the bond is being sold at a premium. B. the stated rate on the bond exceeds the market rate of interest. C. interest expense will be lower than the interest payment each year. D. All of the above.

b

if a company issues bonds at a discount, A. the carrying value of the bonds will decrease over time. B. the carrying value of the bonds will increase over time. C. the carrying value of the bonds will remain constant over time .D. interest expense will be lower than the interest payment.

annual payment (same each year)

installment table: cash payment

princ beg bal - int exp

installment table: int exp

prince end bal from prev year

installment table: prince beg bal formula

beg princ bal - princ requirement

installment table: principle end bal

cash

paid mean

equip, cash ((100/4)(2)) yr 1 - 10,000 ((120,0000(.5)) yr 2 - 5000 ((10,000)(.5)) yr 3 - 2500 ((5000)(.5)) yr 4 - n/a

purch equip for 20,000 on jan 1 2013. expected value of 4 years and no estimated salvage cost

cost-sv / life

straight-line formula

date, princ. beg bal, cash pymt, int exp, price requirement, princ end bal

table headings for amortizing installment notes

cost-sv/units

units of production method formula

a - loader exp, cash 137,400 ((140,000)(0.04)= 56000; 140,000-5600=134,400 + 1200+ 1800) b - sal exp, cash 60,000 c - ins. exp, cash 800

what accounts - c.o. purchased new loader which had 140,000 list price w a 4% disc rate. fob shipping pt of 1200. specialist hired for 1800. employee annual sal of 60,000. insurance 800 per year. loader had a 4 yr life w salvage value what is the number?

int/p, cash 8100

what accounts - cash is paid for 1800, total amount of interest due on note what is the number?

warranty/p, cash 40

what accounts - company pays 40 cash to replace defective merch returned by customer what is the number?

a - equip, cash 40,000 b - depr. exp, a/d 9000 (40,000-4,000/4)

what accounts - cooktop was bought at 40,000 cash and had an expected life of 4 years and the salvage life of 4,000 what is the number? for straight line formula

a - cash, service rev 7000 b - cogs, inv 4000

what accounts - during yr 2, hsc sold 7000 cash merch that had cost company 4000 what is the number?

a- equip, cash 55,000 b (yr 1) depr. exp, a/d 9750 (55,000-10,000/180,000= 0.25(39,000)=9750) c (yr 2) depr. exp, a/d 10265 (55,000-10,000/180,000=0.25(42,500=10265)

what accounts - equip purchased for 55,000 cash. estimated units is 180,000 and s.v of 10,000. if 39,000 units are produced in 2013 and 42,500 in 2014 what is the depr. exp for each yer for production method what is the number?

warrant exp , warranty/p 100

what accounts - hsc estimates warranty exp associated w current sale will me 100 what is the number?

n/p, ash 90,000

what accounts - hsc recognized 90,000 principle of note what is the number?

cash, sales tax/p, sales rev 2100 ((2000)(0.06)=120+2000=2100)

what accounts - hsc sells merch to customer for 2000 cash in state where sales tax is 6% what is the number?

a - equip, cash 55,000 b - depr. exp, a/d 9000 (55,000-10,000/5)

what accounts - purchased equipment for 55,000 cash. useful life of 5 years and estimated salvage life of 10,000 what is the number? for straight line formula

building- 75000 (90,000+30,000=120,000/90,000=0.75; (100,000)(.75)=75000) land - 25,000 (90,000+30,000=120,000/30,000=0.25; (100,000)(0.25)= 25000) cash - 100,000

what accounts - purchased land and building for 100,000. building was appraised at 90,000 and land at 30,000 what is the number?

sales tax/p, cash 120 ((2000)(0.06))

what accounts - remits tax due to state taxing authority; tax was 0.06% on 2000 what is the number?

cash, n/p 90,000

what accounts - sept.1 year 1 hsc borrowed 90,000 from bank w 9% interest what is the number?

a

Equipment that cost $144,000 and on which $120,000 of accumulated depreciation has been recorded was disposed of for $36,000 cash . The entry to record this event would include a a. gain of $12,000. b. loss of $12,000. c. credit to the Equipment account for $36,000. d. credit to Accumulated Depreciation for $120,000.

a

Equipment with a cost of $450,000 has an estimated salvage value of $30,000 and an estimated life of 4 years or 10,000 hours. It is to be depreciated by the declining balance method (double). What is the amount of depreciation for the first full year, during which the equipment was used 2,700 hours? a. $225,000. b. $210,000. c. $112,500. d. $113,400

c

Equipment with a cost of $450,000 has an estimated salvage value of $30,000 and an estimated life of 4 years or 10,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used 2,700 hours? a. $112,500. b. $105,000. c. $113,400. d. $108,750.

c

Galveston Company issued $200,000 of bonds at face value on January 1, 2015. The bondscarried a 5% stated rate of interest and a 10-year term to maturity. Payments are madeannually on December 31. What effect will the issuance of the bonds have on Galveston'sfinancial statements? A. Long-term assets will increase. B. Cash flows from operating activities will increase. C. Long-term liabilities will increase. D. Expenses will increase.

c

Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises. Cash $1,500,000 Accounts Receivable . 1,000,000 Trademarks 1,200,000 Goodwill 2,500,000 Research & Development Costs 2,000,000 a. $9,700,000. b. $5,700,000. c. $3,700,000. d. $7,700,000

a

Hickory Ridge Company purchased land and a building for cash of $920,000. The individual assets were appraised at the following market values: Land$614,400 Building$345,600 Recording the land in the accounting records would a.increase land by $588,800. b.increase land by $614,400. c.increase assets by $920,000. d. Both a and c

a

Houston Company borrowed $20,000 from Dallas Company on March 1, Year 1. Houston issued a note payable that had a one-year term and the annual interest rate is 8%. How will the necessary adjustment, dated December 31, Year 1, affect the elements of the Year 1 financial statements? a - Increase liabilities and increase expenses b - Increase assets and increase revenues c - Increase assets and increase liabilities d - No effect

c

If a bond is considered callable, A. the bond may be converted to common stock at the option of the bondholder. B. the bond may be redeemed early at the option of the bondholder. C. the bond may be redeemed early at the option of the bond issuer. D. the bond cannot be redeemed early

b

In December Year 1, Lucas Corporation sold merchandise for $10,000 cash. Lucas estimated that the warranty obligation relating to this sale is $700. On February 12, Year 2, Lucas paid cash of $550 to settle a related warranty claim by this customer. Which of the following summarizes the effect of the payment of cash to settle the warranty claim in Year 2 on the elements of the financial statements?

d

In December Year 1, Lucas Corporation sold merchandise for $10,000 cash. Lucas estimated that the warranty obligation relating to this sale is $700. On February 12, Year 2, Lucas paid cash of $550 to settle a related warranty claim by this customer.Which of the following summarizes the effect of the recognition of the warranty obligation to the customer who purchased this merchandise on the elements of the Year 1 financial statements?

a

Issuing bonds payable when the market interest rate is less than the stated interest rate: A. results in bonds being issued at a premium. B. results in bonds being issued at less than their face value. C. raises the effective interest rate above the stated rate of interest. D. results in bonds being issued at a premium and the effective interest rate is higher than the stated rate.

a

Jamal Company employees are paid at the end of every week. There are 2 employees and each are paid $500 per week. Jamal withholds $50 in Federal tax and $25 in state tax per employee. Jamal then remits these taxes withheld at the end of every quarter. At the end of every week, Jamal Company would record a payroll transaction that would: a. Decrease Cash by $850 and increase Salary Expense by $1,000 b. Decrease Cash by $500 and increase Salary Expense by $500 c. Decrease Cash by $450 and increase Salary Expense by $450 d. Decrease Cash by $425 and increase Salary Expense by $425

b

Jamal Company employees are paid at the end of every week. There are 2 employees and each are paid $500 perweek. Jamal withholds $50 in Federal tax and $25 in state tax per employee. Jamal then remits these taxes withheldat the end of every quarter When Jamal Company records the weekly salary payments, what accounts would be impacted? a. Cash, Salaries Payable, Federal tax expense, and state tax expense b. Cash, Salaries Expense, Federal taxes payable, and state taxes payable c. Cash, Salaries Expense, Federal tax expense, and state tax expense d. Cash and Salaries Expense only. Any Federal or state tax accounts would be impacted at quarter-end whenJamal Company pays those taxes.

d

KLM Company experienced an accounting event that affected its financial statements as indicated below: Which of the following events could have caused these effects? a.recognizing depreciation. b.paying cash for a capital expenditure. c.amortizing a patent. d.none of the above.

a

Li Company issued $200,000 of 6%, 10-year bonds for 102. From this information, we can assume A. the bonds sold for $204,000. B. the market rate of interest is greater than 6% C. the bonds sold for $196,078. D. None of the above.

d

Madison Company issued an interest-bearing note payable with a face value of $8,400 and a stated interest rate of 8% to Metropolitan Bank on August 1, Year 1. The note carried a one-year term. Based on this information alone, what is the amount of cash flow from operating activities reported on Madison's Year 1 statement of cash flows? a - $672 b - $280 c - $8,400 d - $0

a

On 1/1/2020 a company issues a 10-year $700,000 face value bond at 98. The stated rate on the bond is 6% and the effective rate is 6.2753%. The company uses the effective interest method to amortize discounts and premiums. What is the carrying value of the bond at 12/31/21? a. $687,049 b. $683,837 c. $688,163 d. $686,000

b

On April 1, 2019, Halo Co. issued a $5,000 face value discount note to the Capri Bank. The note had a 12 percent discount rate and a one-year term Halo Co. earned $2,000 of revenue in 2019, the amount of net income would be a. $2,000. b. $1,550. c. $1,400. d. $1,850

c

On April 1, 2019, Halo Co. issued a $5,000 face value discount note to the Capri Bank. The note had a 12 percent discount rate and a one-year term The amount of cash Halo received on April 1, 2019, was a. $5,000. b. $4,250. c. $4,400. d. $5,500

d

On April 1, 2019, Halo Co. issued a $5,000 face value discount note to the Capri Bank. The note had a 12 percent discount rate and a one-year term The total carrying value of Halo's liabilities on December 31, 2019, would be a. $5,600. b. $5,000. c. $5,450. d. $4,850

a

On April 1, Bitner Company borrowed $10,000 from Century Bank. The note was for 1 year and carried an 8%annual interest rate. Bitner Company's year-end is December 31. What kind of adjusting entry, if any, needs to be recorded at year-end by Bitner Company to properly record events associated with the loan from CenturyBank? a. $600 to record interest expense and interest payable b. $800 to record interest expense and interest payable c. $400 to record interest expense and interest payable d. no adjusting entry is necessary

b

On January 1, 2015, Superior Landscaping Company paid $17,000 to buy a stump grinder. If Superior uses the grinder to remove 2,500 stumps per year, it would have an estimated useful life of 10 years and a salvage value of $4,500. The amount of depreciation expense for the year 2015, using units-of-production depreciation and assuming that 3,500 stumps were removed, is a.$2,380. b.$1,750. c.$1,700. d.$1,250

a

On January 1, 2015,Fulsom Corporation purchased a machine for $50,000. Fulsom paid shipping expenses of $500as well as installation costs of $1,200. Fulsom estimated the machine would have a useful life of ten years and an estimated salvage value of $3,000. If Fulsom records depreciation using the straight-line method, depreciation expense for 2016 is a. $4,870. b. $5,170. c. $5,270. d. $5,570

a

On January 1, Year 1, Mahoney Company borrowed $324,000 cash from Sun Bank by issuing a 5-year, 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan equals $81,150. Which of the following shows the effects on the elements of the financial statements of the cash payment on December 31, Year 1?

b

On a classified balance sheet, the financial statement user will be able to distinguish between: a - cash flow from operations and cash flow from investing activities. b - current and noncurrent assets. c - product and period costs. d - none of these answer choices are correct.

b

Pace Company issued bonds with a face value of $200,000 at 97. How does the issuance affect the company's accounting equation? a - Assets and liabilities would both increase by $200,000. b - Assets and liabilities would both increase by $194,000. c - Assets would increase by $194,000 and liabilities would increase by $200,000. d - Assets would increase by $200,000, and liabilities would increase by $194,000.

c

Receivables are normally reported on the balance sheet at net realizable value. In contrast, payables are carried at face value. Which accounting principle requires this treatment of payables? a - Materiality concept b - Monetary unit assumption c - Going concern assumption d - Realizability concept

a

Technical Services, Inc. (TSI) guarantees the quality of its instructional services. TSI earned $40,000 of cash revenue from instructional services in 2019. The company estimates that future warranty claims will be 6percent of revenue. During 2019, TSI paid $700 cash on warranty claims. Based on this information, the amount of net income and the net change in cash for 2019 would be a. $37,600 / $39,300. b. $37,600 / $37,600. c. $39,300 / 39,300. d. $38,300 / $39,300

d

The book value of an asset is equal to the a. asset's fair value less its historical cost. b. blue book value relied on by secondary markets. c. replacement cost of the asset. d. asset's cost less accumulated depreciation.

c

The term applied to the periodic expiration of a plant asset's cost is a. amortization. b. depletion. c. depreciation. d. cost expiration

c

Underestimating the number of tons of a mineral that can be mined over a mineral deposit's life will result in a.overstated net income each year. b.overstated total assets each year. c.overstated depletion expense each year. d.no effect on total assets each year.

b

Vargas Company issued a $20,000, 10-year term note to Central Bank on January 1, 2015.The note called for equal annual payments of principal and interest each December 31. Howwould the issuance of the note affect Vargas's financial statements? A. Long-term assets increase B. Long-term liabilities increase C. Cash inflows for investing activities increase D. All of the above are true

d

What is unique about a classified balance sheet? a. It contains highly confidential information that is classified as secure and should only be made available to individuals with top-level security clearance. b. It contains information that is classified as unique to a particular industry. c. It contains information that the company has classified as most important to present to financial statementreaders. d. It distinguishes current assets and liabilities from those that are considered non-current or long-term

b

Which depreciation method produces the most depreciation expense in the first year? a. Straight-line b. Double declining balance c. Units of production d. They would all result in the same amount

b

Which interest rate on a bond determines the amount of the interest payment? a. Effective rate b. Stated rate c. Market rate d. None of the above

a

Which of the following describes a callable bond? a - Can be called for early retirement at the option of the issuer b - Can be called for early retirement at the option of the bondholder c - Convertible to common stock at the option of the bondholder d - Convertible to common stock at the option of the issuer

d

Which of the following events would cause long term liabilities to decrease?A. Making a payment on a long-term serial note. B. Paying an account payable. C. Repaying a bond. D. Both A and C

b

Which of the following represents the correct journal entry to record a taxable cash sale of $1,040 if the sales tax rate is 5%? a - A debit to cash for $1,092, a debit to sales tax expense for $52, and a credit to sales revenue for $1,040. b - A debit to cash for $1,092, a credit to sales tax payable for $52, and a credit to sales revenue for $1,040. c - A debit to cash for $1,040, a credit to sales tax payable for $52, and a credit to sales revenue for $988. d - None of these answer choices are correct.

a

Which of the following would cause a company to issue bonds at a discount? A. The market rate of interest is higher than the stated rate on the bonds. B. The market rate of interest is lower than the stated rate on the bonds. C. The bonds have a longer than average term to maturity. D. Both B and C.

a

Which statement best expresses the 'going concern' concept?a. A company is assumed to continue operations indefinitely, benefitting from assets and paying liabilities. b. A company has a concern about its future. c. The auditors have issued an opinion that expresses ongoing concerns about the financial stability of a company. d. There is a concern about the financial health of an industry overall and the abilities of the companies that are part of that industry to generate profits.

d

Wilson Company issued $200,000 of callable bonds at face value on January 1, 2016. The bonds carried a 2% call premium. If Williams calls the bonds, this event would A. decrease equity by $4,000. B. decrease liabilities by $200,000. C. decrease assets by $204,000. D. all of these answer choices are correct.

b

Z Company purchased an asset for $24,000 onJanuary 1, 2015. The asset was expected to have a four-year life and a $4,000 salvage value. Assume that Z Company uses straight-line depreciation. If on January 1, 2016, Z Company sells the asset for$10,000, the statement of cash flows would report a a.$10,000 cash inflow from gain on the sale of the asset in the operating activities section. b.$10,000 cash inflow from an asset disposal in the investing activities section. c.$10,000 cash inflow from an asset disposal in the financing activities section. d.$5,000 loss on the financing activities section of the cash flow statement. e.a and c.

a

Z Company purchased an asset for $24,000 onJanuary 1, 2015. The asset was expected to have a four-year life and a $4,000 salvage value. The amount of depreciation expense for 2015 using double-declining-balance would be a.$12,000. b.$3,000. c.$6,000. d.$2,000

b

Zappy's Company borrowed $250,000 on January 1, 2020. The note carried a 4% annual interest rate and required annual payments each December 31st for 4 years of $68,873 each.53. The balance in the notes payable account (after the annual payment is made) on the 12/31/20 balance sheet will be: a. $250,000 b. $191,127 c. $181,127 d. $240,000

c

Zappy's Company borrowed $250,000 on January 1, 2020. The note carried a 4% annual interest rate and required annual payments each December 31st for 4 years of $68,873 each.53. The portion of the payment which will be applied to principal in 2020 will be: a. $68,873 b. $62,500 c. $58,873 d. $61,22854.

(bv)(2(straight-line rate)

accelerated depression/double declining balance formula

a

alveston Company issued $200,000 of bonds at face value on January 1, 2015. The bondscarried a 5% stated rate of interest and a 10-year term to maturity. Payments are madeannually on December 31. What effect will the December 31, 2015 payment have onGalveston's financial statements? A. Cash flows from operating activities will decrease. B. Cash flows from financing activities will decrease. C. Cash flows from investing activities will decrease. D. Both A and B

date, int exp, cash pymt, disc amort, b/p, disc b/p, cv

amortize bond disc using effective i.r table headings

fv (same each year)

amortize bond disc using effective i.r: b/p

fv x stated ir (same each year)

amortize bond disc using effective i.r: cash payment

b/p - disc b/p

amortize bond disc using effective i.r: cv

int exp-cash pymt (only for end years)

amortize bond disc using effective i.r: discount amortization

fv x offering disc

amortize bond disc using effective i.r: discount b/p

cv x effective (only for end years)

amortize bond disc using effective i.r: int exp

fv (same each year)

amortize bond premium: b/p

fv x stated ir (only for end year)

amortize bond premium: cash pymt

b/p + prem

amortize bond premium: cv

cv x effective (only for end year)

amortize bond premium: int exp

int exp - cash pymt (only for end year)

amortize bond premium: prem amort

1 - fv x prem = -fv 2 - prev prem - prem amort

amortize bond premium: premium

bond/p, disc on bond, c.v.

amortizing bond disc count using straight line method table headings

fv

amortizing bond disc count using straight line: bond/p

fv-disc

amortizing bond disc count using straight line: cv

1 - fv x selling% = -fv 2 - prev disc - straight line method

amortizing bond disc count using straight line: disc on bond

recognized

another word for accrued

d

argas Company issued a $20,000, 10-year term note to Central Bank on January 1, 2015.The note called for equal annual payments of principal and interest each December 31. Howwould the December 31, 2015 payment affect Vargas's financial statements? A. Current assets decrease B. Cash outflows for financing activities increase C. Cash outflows for operating activities increase D. All of the above are true