ACCOUNTING 202 CHAPTER 11 TRUE FALSE STATEMENTS

ACCOUNTING 202 CHAPTER 11 TRUE-FALSE STATEMENTS . 1. All liabilities must be paid out of current earnings. 2. Current liabilities are expected to be paid within one ...
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c. Cash ....................................................................................................... 300 Interest Ex pense ...................................................................................... 18,000 Notes Payable ............................................................................... 318,000 d. Cash ....................................................................................................... 300,000 Interest Ex pense ...................................................................................... 18,000 Notes Payable ............................................................................... 300,000 Interest Pa yable ............................................................................ 18,000 14. What is the adjusting entry required if Agler Brick Company prepares financial statements on June 30? a. Interest Ex pense ...................................................................................... 12,000 Interest Pa yable ............................................................................ 12,000 b. Interest Ex pense ...................................................................................... 12,000 Cash .............................................................................................. 12,000 c. Interest Pa yable ....................................................................................... 12,000 Cash .............................................................................................. 12,000 d. Interest Payable ....................................................................................... 12,000 Interest Ex pense ........................................................................... 12,000 15. What entry will Agler Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30? a. Notes Payable .......................................................................................... 318,000 Cash .............................................................................................. 318,000 b. Notes Payable .......................................................................................... 300,000 Interest Pa yable ....................................................................................... 18,000 Cash .............................................................................................. 318,000 c. Interest Ex pense ...................................................................................... 18,000 Notes Payable .......................................................................................... 300,000 Cash .............................................................................................. 318,000 d. Interest Payable ....................................................................................... 12,000 Notes Payable .......................................................................................... 300,000 Interest Expense ...................................................................................... 6,000 Cash .............................................................................................. 318,000 16. The interest expense on a $1,000, 4%, 3-month note is a. $10 b. $40 c. $100 d. $120 b. $40,000 c. $75,000 d. $80,000. 20. The contractual rate of interest is usually stated as a. a monthly rate. b. a daily rate. c. a semiannual rate. d. an annual rate. 21. If twenty $1,000 convertible bonds with a carrying value of $25,000 are converted into 3,000 shares of $5 par value common stock, the journal entry to record the conversion is a. Bonds Paya ble ......................................................................................... 25,000 Common Stock ............................................................................. 25,000 b. Bonds Paya ble ......................................................................................... 20,000 Premium on Bond s Payable .................................................................... 5,000 Common Stock ............................................................................. 25,000 c. Bonds Paya ble ......................................................................................... 20,000 Premium on Bond s Payable .................................................................... 5,000 Common Stock ............................................................................. 15,000 Paid-in Capital in Excess of Par ................................................... 10,000 d. Bonds Paya ble ......................................................................................... 25,000 Discount on Bond s Payable .......................................................... 5,000 Common Stock ............................................................................. 15,000 Paid-in Capital in Excess of Par ................................................... 5,000 22. A corporation issued $600,000, 10%, 5-year bonds on January 1, 2003 for $648,666 which reflects an effective-interest rate of 8%. Interest is paid semiannually on January 1 and July 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2003, is a. $30,000. b. $24,000. c. $32,433. d. $25,947. ANSWERS Multiple Choice