Cauce Corporation is preparing its year-end balance sheet. The company records show the following selected amounts at the end of the year. Total assets Total noncurrent assets Liabilities: Notes payable (8%, due in 5 years) Accounts payable Income taxes payable. Liability for withholding taxes Rent revenue collected in advance Bonds payable (due in 15 years) Wages payable Property taxes payable Note payable (10%, due in 6 months) Interest payable Common stock Required: $ 620,000 318,000 17,000 50,000 11,000 4,000 10,000 92,000 10,000 6,000 12,000 500 250,000 1-a. What is the amount of current liabilities? 1-b. Compute working capital. 2. Would your computation be different if the company reported $310,000 worth of contingent liabilities in the notes to its financial statements?

Cauce Corporation is preparing its year-end balance sheet. The company records show the following selected amounts at the end of the year. Total assets Total noncurrent assets Liabilities: Notes payable (8%, due in 5 years) Accounts payable Income taxes payable. Liability for withholding taxes Rent revenue collected in advance Bonds payable (due in 15 years) Wages payable Property taxes payable Note payable (10%, due in 6 months) Interest payable Common stock Required: $ 620,000 318,000 17,000 50,000 11,000 4,000 10,000 92,000 10,000 6,000 12,000 500 250,000 1-a. What is the amount of current liabilities? 1-b. Compute working capital. 2. Would your computation be different if the company reported $310,000 worth of contingent liabilities in the notes to its financial statements?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, the first day of its fiscal year, Jacinto Company issued $6,500,000 of six-year, 7% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 8%, resulting in Jacinto Company receiving cash of $6,194,985. Required: a. Journalize the entries to record the following (refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.): 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount amortization, using…
For each of the following situations, indicate the amount shown as current or long-term liability on the balance sheet of Anchor, Inc., at December 31: a. Anchor's general ledger shows a credit balance of $125,000 in Long-Term Notes Payable. Of the amount, a $25,000 installment becomes due on June 30 of the following year. b. Anchor estimates its unpaid income tax liability for the current year is $34,000; it plans to pay this amount in March of the following year. c. On December 31, Anchor received a $15,000 invoice for merchandise shipped on December 28. The merchandise has not yet been received. The merchandise was shipped F.O.B. shipping point. d. During the year, Anchor collected $10,500 of state sales tax. At year-end, it has not yet remitted $1,400 of these taxes to the state department of revenue. e. On December 31, Anchor's bank approved a $5,000, 90-day loan. Anchor plans to sign the note and receive the money on January 2 of the following year. Current Liability Long-Term…
On July 1, Year 1, Khatri Industries Inc. issued $18,000,000 of 10-year, 5% bonds at a market (effective) interest rate of 6%, receiving cash of $16,661,102. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute…
Cauce Corporation is preparing its year-end balance sheet. The company records show the following selected amounts at the end of the year: Total assets $ 620,000 Total noncurrent assets 314,000 Liabilities: Notes payable (8%, due in 5 years) 24,000 Accounts payable 55,000 Income taxes payable 10,000 Liability for withholding taxes 1,000 Rent revenue collected in advance 9,000 Bonds payable (due in 15 years) 109,000 Wages payable 9,000 Property taxes payable 5,000 Note payable (10%, due in 6 months) 15,000 Interest payable 800 Common stock 180,000 Required: 1-a. What is the amount of current liabilities? 1-b. Compute working capital. 2. Would your computation be different if the company reported $350,000 worth of contingent liabilities in the notes to its financial statements?
The adjusted trial balance for Bramble Corp. at the end of the current year contained the following accounts. 5-year Bonds Payable 8% $1170000 Bond Interest Payable 37000 Premium on Bonds Payable 73000 Notes Payable (3 mo.) 29000 Notes Payable (5 yr.) 120000 Mortgage Payable ($11000 due currently) 146000 Salaries and Wages Payable 13000 Taxes Payable (due 3/15 of next yr) 18000 The total long-term liabilities reported on the balance sheet are $1498000. $1509000. $1425000. $1436000.
On January 1, Year 1, Platte Corporation issues a 5-year note payable for $5,000. The interest rate is 5% and the annual payment of $1,156, due each December 31, includes both interest and principal. Which of the following correctly shows the effect of the issuance of the note on Platte's financial statements? Assets = Liabilities + n/a n/a (5,000) 5,000 A. 5,000 B. 5,000 C. (5,000) D. 5,000 Multiple Choice O Option A O 0 0 Option B Option D Balance Sheet Option C Stockholders' Equity 5,000 5,000 n/a n/a Revenue 5,000 5,000 n/a n/a Income Statement - Expense n/a n/a n/a n/a = Net Income 5,000 5,000 n/a n/a Statement of Cash Flows. 5,000 FA 5,000 IA (5,000) IA 5,000 FA
Kier Company issued $740,000 in bonds on January 1, Year 1. The bonds were issued at face value and carried a 3-year term to maturity. The bonds have a 5.50% stated rate of interest interest is payable in cash on December 31 each year. Based on this information alone, what are the amounts of interest expense and cash flows from operating activities, respectively, that will be reported in the financial statements for the year ending December 31, Year 1? Multiple Choice O Zero and $40,700 $40,700 and $40,700 Zero and Zero $40,700 and Zero
The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…
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Campbell Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $87,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $92,658,219. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for 20Y1. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of…
Balance sheet and income statement data indicate the following: Bonds payable, 6% (due in 15 years) $1,200,000 Income before income tax for year 320,000 Income tax for year 80,000 Interest payable 33,000 Interest receivable 19,000 Based on the data presented above, what is the times interest earned ratio? (Round to two decimal places.)