Accounting Final

The recording of accounts payable results from what?

Usually the purchase of goods or services with payment due in one month or less

When will bonds sell at a premium?

When the stated rate is more than the market rate

What is true regarding bonds Payable?

Debt that is sold to many creditors called bondholders with several options

Describe Treasury shares

# shares repurchased by the company and held for some future use

Describe issued shares

the number of shares sold

When must a current liability be repaid

within 12 months

A bond issuing at 102.75 means that the bond sold for...

1000x1.0275=1027.50

During 2013, Great Adventures sold 160 dune buggies for $4,000 each. The dune buggies carry a 5-year warranty for defects. Estimates suggest that repair costs will average 4% of the total selling price. The estimated warranty liability at the beginning of the year was $14,000, and $20,000 in claims was actually incurred during 2013 to honor the warranty. What was the warranty expense for 2013?

160x4,000x.04=25,600

General Lighting During the first quarter of 2013, the company sold 4,000 batteries on credit for $150 each plus state sales tax of 6%. Refer to General Lighting. What is the amount of the accounts receivable as a result of this transaction?

4,000x150=600,000 Sales sales tax=600,000x0.6=36,000 accts. Rec is 600,000+36,000= 636,000

General Lighting During the first quarter of 2013, the company sold 4,100 batteries on credit for $150 each plus state sales tax of 7%. Refer to General Lighting. Sales taxes are required to be paid to the state taxing authority at the end of the quarter. What is the amount of the current liability related to this transaction?

4,100x150x0.7=43,050

Long Term debt generally includes

Notes, Loans, mortgages, and bonds due after 12 months

When bonds are issued by a company, the accounting entry shows an:

increase to cash and bonds payable

Outstanding shares represent what?

number of shares sold and still owned by stockholders. Not repurchased by the company

What are the elements of stockholders' equity

retained earnings, preferred and or common stock

What do you call the interest printed on the bond certificate?

stated rate

Describe authorized

the maximum number of shares authorized for sale by a state

When do bonds sell at a discount?

When the state rate is less then the market rate

What would describe a callable bond?

Can be paid early at the option of the company

The current portion of long-term debt would appear on the balance sheet as what?

Current Liability

Impact on accounting equation of recording the accrual of interest expense?

Expenses and liabilities increase

What is the impact on the accounting equation of recording the accrual of wages exxpense?

Expenses and liabilities increase

What Items are classified as a current liability account?

Any Probable debt due within 12 months

What is the impact on the accounting equation of recording a payment to a supplier on account?

Assets decrease and liabilities decrease

How would a capital lease liability appear on the balance sheet?

Some current and some longterm

What are the lease conditions that would result in a capital lease to the lessee?

The bargain purchase option, keep the leased asset after the last payment, or the asset is leased for at least 75% of its useful life

Why are convertible bonds more attractive?

The bondholder can convert the bond into common stock at the bondholders' option

What is true regarding accounts payable?

These are amounts owed to others, carry no interest, and are current liabilities

A convertible Bond is....

Can be converted into common stock at the option of the bondholder