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Manal Elkhoshkhany
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Category: Finance
Satisfied Customers: 9470
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1) A $20,000, 8%, 9-month note payable requires an ...

Resolved Question:

1) A $20,000, 8%, 9-month note payable requires an interest payment of $1,200 at maturity.
True or false?

2) If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid.True or False?

3) If the market rate of interest is greater than the contractual rate of interest, bonds will sell at a discount.True or False?

4) The interest charged on a $100,000 note payable, at the rate of 6%, on a 90-day note would be
A) 500
B) 3,333
C) 6,000
D) 1,500
5) On January 1, 2007, Dunnon Company, a calendar-year company, issued $600,000 of notes payable, of which $150,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2007, is

Current Liabilities, $300,000; Long-term Debt, $300,000.

Current Liabilities, $150,000; Long-term Debt, $450,000.

Current Liabilities, $600,000.

Long-term Debt , $600,000.
6) A bond with a face value of $100,000 and a quoted price of 98has a selling price of

$98,250.

$98,005.

$98,500.

$98,050.
7) On January 1, 2007, $1,000,000, 10-year, 10% bonds, were issued for $970,000. 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

$9,700.

$250.

$808.

$3,000.

8) Lopez Corporation issues 500, 10-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a

debit to Cash for $480,000.

debit to Cash of $500,000.

credit to Discount on Bonds Payable for $20,000.

credit to Bonds Payable for $480,000

9) Two thousand bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is

Cash 2,040,000
Discount on Bonds Payable 40,000
Bonds Payable 2,000,000


Cash 2,040,000
Bonds Payable 2,040,000


Cash 2,000,000
Premium on Bonds Payable 40,000
Bonds Payable 2,040,000


Cash 2,040,000
Premium on Bonds Payable 40,000
Bonds Payable 2,000,000


10) Golden Company received proceeds of $94,250 on 10-year, 8% bonds issued on January 1, 2006. The bonds had a face value of $100,000, pay interest annually on December 31st, and have a call price of 101. Golden uses the straight-line method of amortization.
What is the amount of interest Golden must pay the bondholders in 2006?

$7,540

$8,575

$8,000

$7,425

11) Sunwood Company issued $500,000 of 6%, 5-year bonds at 98, which pays interest annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

$490,000

$492,000

$494,000

$491,000

12) The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.True or False?

13) A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.True or False?

14) A company purchased land for $70,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at

$75,000.

$82,000.

$70,000.

$77,000.

15) Bale Company buys land for $100,000 on 12/31/06. As of 3/31/07, the land has appreciated in value to $101,000. On 12/31/07, the land has an appraised value of $103,600. By what amount should the Land account be increased in 2007?

$1,000

$2,600

$3,600

$0

16) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 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 3,300 hours?

$43,500

$52,500

$49,500

$48,000

17) A truck was purchased for $18,000 and it was estimated to have a $3,000 salvage value at the end of its useful life. Monthly depreciation expense of $250 was recorded using the straight-line method. The annual depreciation rate is

20%.

25%.

2%.

16%.

18) Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.
The depreciable cost of the equipment is

$12,500

$50,000

$90,000

$75,000

19) Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.
The depreciation expense using the straight-line method of depreciation is

$17,500

$18,000

$12,500

none of the above

20) Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.
The book value of the equipment at the beginning of the third year would be

$75,000

$25,000

$90,000

$65,000


21) A company sells a plant asset that originally cost $180,000 for $60,000 on December 31, 2007. The accumulated depreciation account had a balance of $90,000 after the current year's depreciation of $15,000 had been recorded. The company should recognize a

$60,000 loss on disposal.

$30,000 loss on disposal.

$30,000 gain on disposal.

$60,000 gain on disposal.
Submitted: 6 years ago.
Category: Finance
Expert:  Manal Elkhoshkhany replied 6 years ago.

Hello Brian

I am working on the questions now, but for future posts, when you intend to address your questions to me, kindly type "For BusinessTutor" at the beginning of the post so that no other expert signs the post out.

 

Thank you

Customer: replied 6 years ago.
Ok, thanks for letting me know. I simply forgot
Expert:  Manal Elkhoshkhany replied 6 years ago.

Brian

 

Please check the choices for number 6.  The correct answer should be $98,000 and that is not among the choices

Customer: replied 6 years ago.
Those were the choices given to me. Remember you dont have to make a 100, I just want your best guess because there is a time limit. You have about 45 minutes. Sorry to rush you.
Customer: replied 6 years ago.
The question was supposed to say 98 1/2.   Mistake on my part.
Expert:  Manal Elkhoshkhany replied 6 years ago.
All clear , don't worry i will finish before the deadline :)
Expert:  Manal Elkhoshkhany replied 6 years ago.

This is what i have done so far so that you start entering the solutions:

 

  • 1) A $20,000, 8%, 9-month note payable requires an interest payment of $1,200 at maturity.
    True or false?

 

True

2) If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid. True or False?

 

False


3) If the market rate of interest is greater than the contractual rate of interest, bonds will sell at a discount. True or False?

 

True

4) The interest charged on a $100,000 note payable, at the rate of 6%, on a 90-day note would be
A) 500
B) 3,333
C) 6,000
D) 1,500

 


5) On January 1, 2007, Dunnon Company, a calendar-year company, issued $600,000 of notes payable, of which $150,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2007, is

Current Liabilities, $300,000; Long-term Debt, $300,000.

Current Liabilities, $150,000; Long-term Debt, $450,000.

Current Liabilities, $600,000.

Long-term Debt , $600,000.

 


6) A bond with a face value of $100,000 and a quoted price of 98has a selling price of

$98,250.

$98,005.

$98,500.

$98,050.

 


7) On January 1, 2007, $1,000,000, 10-year, 10% bonds, were issued for $970,000. 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

$9,700.

$250.

$808.

$3,000.

8) Lopez Corporation issues 500, 10-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a

debit to Cash for $480,000.

debit to Cash of $500,000.

credit to Discount on Bonds Payable for $20,000.

credit to Bonds Payable for $480,000

9) Two thousand bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is

Cash 2,040,000
Discount on Bonds Payable 40,000
Bonds Payable 2,000,000


Cash 2,040,000
Bonds Payable 2,040,000


Cash 2,000,000
Premium on Bonds Payable 40,000
Bonds Payable 2,040,000


Cash 2,040,000
Premium on Bonds Payable 40,000
Bonds Payable 2,000,000


10) Golden Company received proceeds of $94,250 on 10-year, 8% bonds issued on January 1, 2006. The bonds had a face value of $100,000, pay interest annually on December 31st, and have a call price of 101. Golden uses the straight-line method of amortization.
What is the amount of interest Golden must pay the bondholders in 2006?

$7,540

$8,575

$8,000

$7,425

11) Sunwood Company issued $500,000 of 6%, 5-year bonds at 98, which pays interest annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

$490,000

$492,000

$494,000

$491,000

12) The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.True or False?

 

True

13) A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.True or False?

 

True

Manal Elkhoshkhany, Tutor
Category: Finance
Satisfied Customers: 9470
Experience: More than 5000 online tutoring sessions.
Manal Elkhoshkhany and 5 other Finance Specialists are ready to help you
Customer: replied 6 years ago.
Did you get the other 8 questions?
Expert:  Manal Elkhoshkhany replied 6 years ago.
14) A company purchased land for $70,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at

$75,000.

$82,000.

$70,000.

$77,000.

15) Bale Company buys land for $100,000 on 12/31/06. As of 3/31/07, the land has appreciated in value to $101,000. On 12/31/07, the land has an appraised value of $103,600. By what amount should the Land account be increased in 2007?

$1,000

$2,600

$3,600

$0

16) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 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 3,300 hours?

$43,500

$52,500

$49,500

$48,000

17) A truck was purchased for $18,000 and it was estimated to have a $3,000 salvage value at the end of its useful life. Monthly depreciation expense of $250 was recorded using the straight-line method. The annual depreciation rate is

20%.

25%.

2%.

16%.

18) Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.
The depreciable cost of the equipment is

$12,500

$50,000

$90,000

$75,000
Expert:  Manal Elkhoshkhany replied 6 years ago.

19) Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.
The depreciation expense using the straight-line method of depreciation is

$17,500

$18,000

$12,500

none of the above

20) Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.
The book value of the equipment at the beginning of the third year would be

$75,000

$25,000

$90,000

$65,000


21) A company sells a plant asset that originally cost $180,000 for $60,000 on December 31, 2007. The accumulated depreciation account had a balance of $90,000 after the current year's depreciation of $15,000 had been recorded. The company should recognize a

$60,000 loss on disposal.

$30,000 loss on disposal.

$30,000 gain on disposal.

$60,000 gain on disposal.

Manal Elkhoshkhany, Tutor
Category: Finance
Satisfied Customers: 9470
Experience: More than 5000 online tutoring sessions.
Manal Elkhoshkhany and 5 other Finance Specialists are ready to help you
Expert:  Manal Elkhoshkhany replied 6 years ago.

Brian

Thanks a million for the bonus. When do you get to know the results?

Customer: replied 6 years ago.
I already know. Assuming each question is 5 points each you scored a 100 out of 105. The only one incorrect one was #12. The answer is false. Either way I thank you so much for all you've done and good luck to you! Your a great help and a terrific person!
Expert:  Manal Elkhoshkhany replied 6 years ago.

Thanks a million Brian, but i wish i did not get of them wrong. I can't believe it that i missed this one though. Of course it is false because the double declining method assigns a higher depreciation expense to earlier years than later years, but the useful life remains the same. STUPID ME, i should be hung for this :)

Thank you all the same Brian, and remember i am always here if you need future help, just do not forget to type "For BusinessTutor" at the beginning of your post.

Take care

Customer: replied 6 years ago.
Haha yes I see you hold yourself to a high standard but you still made a 100 so no worries. Thanks again and yes I will remember to type "for business tutor" as to assure that you are the one answering my questions. You are terrific and I cant thank you enough. You take care as well! ;)
Expert:  Manal Elkhoshkhany replied 6 years ago.

I do, i hate it when i miss a question (which is why i have a 4.0 GPA :)

Looking forward to work with you again too Brian, thanks a million for your kind words

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