16911693
Pregunta 1
Pregunta
Which of the following is not an estimated liability?
Respuesta
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. Income taxes paid
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Allowance for bad debts
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Product warranties
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Retirement obligations
Pregunta 2
Pregunta
The estimated warranty obligation at the end of the financial year is best described as
which of the following?
Respuesta
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Contingent liability
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Unrecognized liability
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Uncertain liability
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Constructive liability
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Liability
Pregunta 3
Pregunta
Crank the Volume grants a 120-day warranty on all stereos. Historically, approximately
1% of all units sold prove to be defective, requiring an average repair bill of $100. Sales in
March are $472,500 for 4,500 units. In March, $3,900 of defective units are returned for
replacement. What entry must Crank the Volume make at the end of March to record the
warranty expense?
Respuesta
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Debit Warranty Expense and credit Provision for Warranty Repairs, $4,725
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Debit Warranty Expense and credit Provision for Warranty Repairs, $3,900.
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Debit Warranty Expense and credit Cash, $4,725.
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No entry is needed at March 31.
Pregunta 4
Pregunta
Excursion Camera Co. was organized to sell a single product that carries a 45-day warranty
against defects. Engineering estimates indicate that 4% of the units sold will prove defective and require an average repair cost of $25 per unit. During Expedition’s first month of
operations, total sales were 800 units; by the end of the month, 15 defective units had been
repaired. The liability for product warranties at month-end should be
Respuesta
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$1,175.
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$425.
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$375.
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. $800.
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none of these.
Pregunta 5
Pregunta
A contingent liability should be recorded in the accounts
Respuesta
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. if the amount is due in cash within one year.
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. if the amount can be reasonably estimated.
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if the related future event will probably occur
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Both b and c
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Both a and c
Pregunta 6
Pregunta
An unsecured bond is a
Respuesta
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serial bond.
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term bond.
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registered bond.
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mortgage bond
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debenture bond.
Pregunta 7
Pregunta
. The Discount on Bonds Payable account
Respuesta
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. is expensed at the bond’s maturity
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. is a contra account to Bonds Payable.
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is an expense account.
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is a miscellaneous revenue account.
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has a normal credit balance.
Pregunta 8
Pregunta
The discount on a bond payable becomes
Respuesta
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additional interest expense over the life of the bonds.
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a liability in the year the bonds are sold.
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. a reduction in interest expense over the life of the bonds.
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additional interest expense the in year the bonds are sold
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a reduction in interest expense in the year the bonds mature.
Pregunta 9
Pregunta
A bond that matures in installments is called a
Respuesta
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secured bond.
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term bond
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. serial bond.
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. callable bond.
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zero coupon
Pregunta 10
Pregunta
The carrying value of Bonds Payable equals
Respuesta
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Bonds Payable + Discount on Bonds Payable.
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Bonds Payable - Premium on Bonds Payable.
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Bonds Payable - Discount on Bonds Payable.
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. Bonds Payable + Accrued Interest
Pregunta 11
Pregunta
A corporation issues bonds that pay interest each May 1 and November 1. The corporation’s
December 31 adjusting entry may include a
Respuesta
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credit to Cash.
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debit to Interest Payable.
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debit to Cash.
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credit to Discount on Bonds Payable.
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. credit to Interest Expense.
Pregunta 12
Pregunta
McCabe Corporation issued $560,000 of 7% 10-year bonds. The bonds are dated and sold
on January 1, 20X1. Interest payment dates are January 1 and July 1. The bonds are issued
for $521,724 to yield the market interest rate of 8%. Use the effective-interest method for
questions 12–16.
What is the amount of interest expense that McCabe Corporation will record on July 1,
20X1, the first semi-annual interest payment date? (All amounts rounded to the nearest
dollar.)
Respuesta
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22,400
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$39,200
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$19,600
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$20,869
Pregunta 13
Pregunta
McCabe Corporation issued $560,000 of 7% 10-year bonds. The bonds are dated and sold
on January 1, 20X1. Interest payment dates are January 1 and July 1. The bonds are issued
for $521,724 to yield the market interest rate of 8%. Use the effective-interest method for
questions 12–16.
What is the amount of discount amortization that McCabe Corporation will record on July 1,
20X1, the first semi-annual interest payment date?
Respuesta
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. $0
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. $1,269
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$2,240
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$2,538
Pregunta 14
Pregunta
McCabe Corporation issued $560,000 of 7% 10-year bonds. The bonds are dated and sold
on January 1, 20X1. Interest payment dates are January 1 and July 1. The bonds are issued
for $521,724 to yield the market interest rate of 8%. Use the effective-interest method for
questions 12–16.
What is the total cash payment for interest for each 12-month period? (All amounts
rounded to the nearest dollar.)
Respuesta
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. $22,400
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$41,789
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$39,200
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$44,800
Pregunta 15
Pregunta
What is the total interest expense for the year ended December 31, 20X1?
Respuesta
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$41,789
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$41,879
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39,200
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$19,600
Pregunta 16
Pregunta
What is the carrying amount of the bonds on the January 1, 20X2, Balance Sheet?
Respuesta
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$524,313
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$521,724
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$522,993
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$550,000
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