AC 210 Ch 10 learnsmart

The journal entry to record employer payroll taxes affects ___________

liabilities and stockholder' equity. (The entry increases Payroll Tax expense and increases liabilities)

When the times interest earned ratio is less than 1.0, a company is ________________

not generating enough income to cover its interest expense

What effect will issuing more bonds have on the times interest earned ratio over time?

It will decrease

The early retirement of a bond includes ____________

-payment of cash -recording of a gain or loss -elimination of the liability

US corporations pay federal taxes on _____________

income and payroll

stated rate is used to determine ________________

the interest payment

As of December 31, 2015, $110 of interest had been accrued on a 12%, 1-year, $1,000 note payable. On January 31, 2016, the entry to record the payment of the note's principal and interest requires a ________________.

$110 debit to interest payable, $10 debit to interest expense, $1,000 debit to Notes Payable $1,120 credit to cash

In2005, ABC Company issued $100,000 of 20-year bonds at face value. Ten years later, in 2015, the company retired the bonds early by purchasing them in the open market at $101,000. The entry to record this transaction includes _____________________

-a debit to Bonds Payable of $100,000 -a debit to Loss on Bond Retirement of $1,000 -a credit to Cash of $101,000

ABC Company issues a bond with a face value of $100,000 at par on January 1. ABC prepares financial statements only at December 31, so no adjusting entries are made during the year to accrue interest. If the bond carries a stated interest rate of 6% payable in cash on December 31 of each year, the journal entry to record the first bond interest payment includes ______________.

-a debit to Interest Expense of $6,000 -a credit to Cash of $6,000

Under US GAAP, a contingent liability should ____________

-be in the notes to the financial statements if the loss may possibly occur and can be reasonably estimated -be reported on the balance sheet if the loss will probably occur and can be reasonably estimated -not be reported if the loss is remote and unable to be estimated

In 2005, ABC company issued $100,000 of 20-year bonds at face value. Ten years later, in 2015, the company retired the bonds early by purchasing them in the open market at $101,000. The entry to record this transaction includes ______________

-debit to Bonds Payable of $100,000 -debit to Loss on Bond Retirement of $100,000 -credit to Cash of $101,000

ABC company issues a bond with a face value of $100,000 at par on January 1. The bond carries a stated annual interest rate of 6% payable on December 31 of each year. If ABC issues monthly financial statements, it must make an adjusting entry on January 31 that includes __________________

-debit to Interest Expense of $500 -credit to Interest Payable of $500

ABC airlines collects $300 for a round-trip ticket from Chicago to LA. The flights will not occur until the next accounting period. How should ABC Airlines record the $300 collected in advance?

A debit to cash of $300 and a credit to Unearned Revenue of $300

The issue price of a bond is _______________

based on the present value calculation based on what the market is willing to pay

The carrying value of bonds payable equals _______________

bonds payable minus any discount on bonds payable

The law requires ___________ to pay FICA taxes.

both the employee and employer

paid for merchandise on account

debit inventory credit accounts payable

advertising a bond premium will _________

decrease the

On November 1,2015, ABC Corp borrowed $100,000 cash on a 1-year, 6% note payable that requires ABC to pay both principal and interest on October 31, 2016. Given no prior adjusting entries have been recorded, the adjusting journal entry on December 31, 2015, ABC's year end, would include a ________________________

-debit to Interest Expense of $1000 -credit to Interest Payable of $1000

Texable, Inc. is required to match $45,900 for tis portion of FICA and to pay $4,700 for federal and state unemployment taxes. The entry to record Texable's payroll taxes includes _______________

-debit to Payroll Tax Expense for $50,600 -credit to FICA payable for $45,900 -credit to Unemployment Tax Payable of $4,700

Bond carrying value equals Bonds Payable ______________

-minus Discount on Bonds Payable -plus Premium on Bonds Payable