Accounting 200 100% (14 out of 14 correct)

Chapter 10 Quiz 1

Carolyn Hagan

1 The time period for classifying a liability as current is one year or the . operating cycle, whichever is: A longe r. B shorte . r. C probabl . e. D possibl . e. . Correct! 2 To be classified as a current liability, a debt must be expected to be paid: . A out of existing current . assets. B by creating other current . liabilities. C within 2 . years. D Either a) or . b). Correct! 3 Corricten Company borrows $88,500 on September 1, 2007, from Harrington . State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31, 2007? A $2,65 5. B $3,54 . 0. C $4,42 . 5. D $10,62 . 0. . Correct!

Accounting 200

Chapter 10 Quiz 1

Carolyn Hagan

4 Andre Company has total proceeds from sales of $4,515. If the proceeds . include sales taxes of 5%, what is the amount to be credited to Sales? A $4,00 . 0. B $4,30 . 0. C $4,289.2 . 5. D The correct answer is not . given. Correct! 5 Which of the following is not a measure of liquidity? . A Debt to total assets . ratio. B Working . capital. C Current . ratio. D Current cash debt . coverage. Correct!

6 What term is used for bonds that have specific assets pledged as collateral? . A Callable . bonds. B Convertible . bonds. C Secured . bonds. D Discount . bonds. Correct! 7 Cuso Inc. issues 10-year bonds with a maturity value of $200,000. If the . bonds are issued at a premium, this indicates that: A the contractual interest rate exceeds the market interest rate. B the market interest rate exceeds the contractual . interest rate. . 2

Accounting 200

Chapter 10 Quiz 1

Carolyn Hagan

C the contractual interest rate and the market interest rate are the same. D no relationship exists between the . two rates. . Correct! 8 On January 1, 2007, Scissors Corp. issues $200,000, 5-year, 7% bonds at . face value. The entry to record the issuance of the bonds would include a: . . . . A debit to cash for $14,000. B debit to bonds payable for $200,000. C credit to bonds payable for $200,000. D credit to bond interest expense of $14,000.

Correct! 9 Kant Corporation retires its $100,000 face value bonds at 105 on January 1, . following the payment of interest. The carrying value of the bonds at the redemption date is $103,745. The entry to record the redemption will include a: A credit of $3,745 to Loss on Bond Redemption. B debit of $3,745 to Premium on Bonds . Payable. C credit of $1,255 to Gain on Bond . Redemption. D debit of $5,000 to Premium on Bonds . Payable. . Correct!

10 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 ratio for the year? A 5.00 . B 4.00 . . . 3

Accounting 200 C 6.67 . D 7.50 . . . Correct!

Chapter 10 Quiz 1

Carolyn Hagan

11 On January 1 Pierce Corporation issues $500,000, 5-year, 12% bonds at 96 . with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a: A debit to Interest Expense, $57,600. B debit to Interest Expense, . $60,000. C credit to Discount on Bonds Payable, . $4,000. D credit to Discount on Bonds Payable, . $2,000. . Correct!

12 For the bonds issued in question 11, what is the carrying value of the bonds . at the end of the third interest period? A $492,00 0. B $488,00 . 0. C $472,00 . 0. D $464,00 . 0. . Correct!

13 On January 1, Daisey Duke Inc. issued $1,000,000, 9% bonds for $939,000. . The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Daisey Duke uses the effective-interest method 4

Accounting 200

Chapter 10 Quiz 1

Carolyn Hagan

of amortizing bond discount. At the end of the first year, Daisey Duke should report unamortized bond discount of: A $54,90 0. B $57,10 . 0. C $51,61 . 0. D $51,00 . 0. . Correct!

14 On January 1, Anthony Corporation issued $1,000,000, 14%, 5-year bonds . with interest payable on December 31. The bonds sold for $1,072,096. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Bond Interest Expense is for: . . . . A $120,00 0. B $125,58 1. C $128,65 2. D $140,00 0.

Correct!