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ACCT 2001 Chapter : ACCT Ch 10 Notes Very Good

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azuremammoth471
15 Mar 2019
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LSU
Department
Accounting
Course
ACCT 2001
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All

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Liability is a debt you owe to someone. Those due within _one year_________ of the balance sheet date are usually classified as current liabilities. Can be long term depending on the due date. Illustration: first national bank agrees to lend ,000 on september 1, 2012, if. Cole williams co. signs a ,000, 12%, four-month (current liability) note maturing on. When a company issues an interest-bearing note, the amount of assets it receives generally equals the note"s face value. If youre cole williams write journal entry cash. If cole williams co. prepares financial statements annually, it makes an adjusting entry at december 31 to recognize interest. At maturity (january 1), cole williams co. must pay the face value of the note plus interest. If you didn"t accrue interest it would be . Sales taxes are expressed as a stated percentage of the _sales_________ price. Retailer remits the collections to the state"s department of revenue.

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Related Questions

Fridley Manufacturing's accounting records reveal the following account balances after adjusting entries are made on December 31, 2018:

Accounts payable $ 62,500
Bonds payable (9.4%, due in 2025) 800,000
Lease liability* 41,500
Bonds payable (8.7%, due in 2021) 50,000
Deferred tax liability* 133,400
Discount on bonds payable (9.4%, due in 2025) 12,600
Income tax payable 26,900
Interest payable 38,700
Installment note payable (8% equal installments due 2019 to 2022) 120,000
Notes payable (7.8%, due in 2023) 400,000
Premium on notes payable (7.8%, due in 2023) 6,100
Zero coupon note payable, $50,000 face amount, due in 2024 (net of discount) 31,900

* Long-term liability

Required:

Prepare the current liabilities and long-term debt portions of Fridley's statement of financial position at December 31, 2018. Provide a separate line item for each issue (do not combine separate bonds or notes payable), but some items may need to be split into more than one item.

Fridley Manufacturing
Liabilities Section of the Statement of Financial Position
December 31, 2018
Liabilities
Current liabilities:
Accounts payable $
Interest payable
Income tax payable
Current portion of installment note
Total current liabilities $
Long-term liabilities:
Bonds payable:
Bonds payable (8.7%, due in 2021)
Bonds payable (9.4%, due in 2025) $
Less: Discount on bonds payable
Notes payable:
Notes payable (7.8%, due in 2023) $
Add: Premium on notes payable
Installment note payable (8%)
Note payable (4%, due in 2024) $
Less: Discount on note payable
Other long-term liabilities:
Lease liability
Deferred tax liability
Total liabilities $

analysis of worldcoms financial statements 2000 & 2001

WorldCom,Inc.
Balance Sheet
As on December 31
Figures in millions
ASSETS 2000 2001
Current assets:
Cash and cash equivalents $761 $1,416
Accounts receivable, net ofallowance for bad debts of $1,532 in 2000 and $1,086 in 2001 6,815 5,308
Deferred tax asset 172 251
Other current assets 2,007 2,230
Total current assets 9,755 9,205
Property, plant and equipment,net 37,423 38,809
Goodwill and other intangibleassets 46,594 50,537
Other assets 5,131 5,363
$98,903 $103,914
LIABILITIES AND SHAREHOLDERS'INVESTMENT
Current liabilities:
Short-term debt and currentmaturities of long-term debt $7,200 $172
Accrued interest 446 618
Accounts payable and accruedline costs 6,022 4,844
Other current liabilities 4,005 3,576
Total current liabilities 17,673 9,210
Long-term liabilities, lesscurrent portion:
Long-term debt 17,696 30,038
Deferred tax liability 3,611 4,066
Other liabilities 1,124 576
Total long-termliabilities 22,431 34,680
Minority interests 2,592 101
Company obligated mandatorilyredeemable and other preferred securities 798 1,993
Shareholders' investment:
WorldCom, Inc. common stock,par value $.01 per share; authorized: 5,000,000,000 shares in 2000and none in 2001; issued and outstanding: 2,887,960,378 shares in2000 and none in 2001 29 0
WorldCom group common stock,par value $.01 per share; authorized: none in 2000 and4,850,000,000 shares in 2001; issued and outstanding : none in 2000and 2,967,436,680 shares in 2001 0 30
MCI group common stock, parvalue $.01 per share; authorized: none in 2000 and 150,000,000shares in 2001; issued and outstanding: none in 2000 and118,595,711 in 2001 0 1
Additional paid-incapital 52,877 54,297
Retained earnings 3,160 4,400
Unrealized holding gain (loss)on marketable equity securities 345 -51
Cumulative foreign currencytranslation adjustment -817 -562
Treasury stock, at cost,6,765,316 shares of WorldCom, Inc. in 2000, 6,765,316 sharesof -185 -185
Total shareholders'investment 55,409 57,930
WorldCom,Inc.
Income Statement
For the Years Ending December31
Figures in Millions
2000 2001
Revenues $39,090 $35,179
Operating expenses:
Line costs 15,462 14,739
Selling, general and administrative 10,597 11,046
Depreciation and amortization 4,878 5,880
Total Expenses 30,937 31,665
Operating income 8,153 3,514
Other income (expense):
Interest expense -970 -1,533
Miscellaneous 385 412
Income before income taxes, minorityinterest 7,568 2,393
Provision for income taxes 3,025 927
Income before minority interests 4,543 1,466
Minority interests -305 35
Income before cumulative effect ofaccounting change 4,238 1,501
Cumulative effect of accounting change(net of income tax of $50 in 2000) -85 0
Net income $4,153 $1,501
Distributions on mandatorily redeemablepreferred securities and
other preferred dividend requirements 65 117
Net income applicable to commonshareholders $4,088 $1,384
$98,903

$103,914
what things would you mention in youranalysis?

Question 8. 8. (TCO D) Which of the following is not acceptabletreatment for the presentation of current liabilities? (Points :5)

Listing current liabilities in order of maturity

Listing current liabilities according to amount

Offsetting current liabilities against assets that are to beapplied to their liquidation

Showing current liabilities immediately below current assets toobtain a presentation of working capital

Question 9. 9. (TCO D) Jenkins Corporation has $2,500,000 ofshort-term debt it expects to retire with proceeds from the sale of75,000 shares of common stock. If the stock is sold for $20 pershare subsequent to the balance sheet date, but before the balancesheet is issued, what amount of short-term debt could be excludedfrom current liabilities? (Points : 5)$1,500,000. $2,500,000. $1,000,000. $0

Question 10. 10. (TCO D) Tender Foot, Inc. is involved inlitigation regarding a faulty product sold in a prior year. Thecompany has consulted with its attorney and determined that it ispossible that it may lose the case. The attorneys estimated thatthere is a 40% chance of losing. Tender Foot’s attorney estimatedthat if it loses, then the amount of any payment would be $500,000.What is the required journal entry as a result of this litigation?(Points : 5)

Debit Litigation Expense for $500,000 and credit LitigationLiability for $500,000.

No journal entry is required.

Debit Litigation Expense for $200,000 and credit LitigationLiability for $200,000.

Debit Litigation Expense for $300,000 and credit LitigationLiability for $300,000

Question 11. 11. (TCO D) Reich, Inc. issued bonds with amaturity amount of $200,000 and a maturity 10 years from date ofissue. If the bonds were issued at a premium, this indicates that(Points : 5)

the effective yield or market rate of interest exceeded thestated (nominal) rate.

the nominal rate of interest exceeded the market rate.

the market and nominal rates coincided.

no necessary relationship exists between the two rates.

Question 12. 12. (TCO D) The printing costs and legal feesassociated with the issuance of bonds should (Points : 5)

be expensed when incurred.

be reported as a deduction from the face amount of bondspayable.

be accumulated in a deferred charge account and amortized overthe life of the bonds.

not be reported as an expense until the period the bonds matureor are retired.

Question 13. 13. (TCO D) Feller Company issues $20,000,000 of10-year, 9% bonds on March 1, 2010 at 97 plus accrued interest. Thebonds are dated January 1, 2010, and pay interest on June 30 andDecember 31. What is the total cash received on the issue date?(Points : 5) $19,400,000$20,450,000 $19,700,000 $19,100,000

Question 14. 14. (TCO D) A company issues $5,000,000, 7.8%,20-year bonds to yield 8% on January 1, 2010. Interest is paid onJune 30 and December 31. The proceeds from the bonds are$4,901,036. Using effective-interest amortization, how muchinterest expense will be recognized in 2010? (Points :5) $195,000 $390,000 $392,124 $392,083

Question 15. 15. (TCO D) Clothes Horse Corp. ("CHC") issued$500,000 bonds due in 10 years on January 1, Year 1 at a premiumfor $567,105. Bond issue costs of $25,000 are being amortized overthe 10 year life of the bonds under U.S. GAAP. On January 1, Year6, when the carrying value of the bond was $539,940, CHC redeemedthe bonds at 102. What amount of gain should CHC record related tothe redemption? (Points : 5) $10,000 $17,440 $39,940 $52,440