Question : 131. Debtors interested in the times-interest-earned ratio because they want to A. know : 1239304

 

 

131. Debtors are interested in the times-interest-earned ratio because they want to A. know what rate of interest the corporation is payingB. have adequate protection against a potential drop in earnings jeopardizing their interest paymentsC. be sure their debt is backed by collateralD. know the tax effect of lending to a corporation

 

132. Any unamortized premium should be reported on the balance sheet of the issuing corporation as A. a direct deduction from the face amount of the bonds in the liability sectionB. as paid-in capitalC. a direct deduction from retained earningsD. an addition to the face amount of the bonds in the liability section

 

133. Numbers of times interest charges earned is computed as A. Income before income taxes plus Interest Expense divided by Interest ExpenseB. Income before income taxes less Interest Expense divided by Interest ExpenseC. Income before income taxes divided by Interest ExpenseD. Income before income taxes plus Interest Expense divided by Interest Revenue

 

134. Balance sheet and income statement data indicate the following: 

Bonds payable, 8% (issued 1990, due 2015)

$1,200,000

Preferred 8% stock, $100 par

 

  (no change during the year)

200,000

Common stock, $50 par

 

  (no change during the year)

1,000,000

Income before income tax for year

320,000

Income tax for year

80,000

Common dividends paid

60,000

Preferred dividends paid

16,000

 

 

Based on the data presented above, what is the number of times bond interest charges were earned (round to two decimal places)? A. 5.67B. 4.33C. 3.24D. 3.50

 

135. Balance sheet and income statement data indicate the following: 

Bonds payable, 6% (issued 2000, due 2020)

$1,200,000

Preferred 8% stock, $100 par

 

  (no change during the year)

200,000

Common stock, $50 par

 

  (no change during the year)

1,000,000

Income before income tax for year

340,000

Income tax for year

80,000

Common dividends paid

60,000

Preferred dividends paid

16,000

 

 

Based on the data presented above, what is the number of times bond interest charges were earned (round to two decimal places)? A. 5.72B. 6.83C. 4.72D. 4.83

 

136. When the effective-interest method is used, the amortization of the bond premium A. increases interest expense each periodB. decreases interest expense each periodC. increases interest expense in some periods and decreases interest expense in other periodsD. has no effect on the interest expense in any period

 

137. The Merchant Company issued 10-year bonds on January 1, 2011. The 15% bonds have a face value of $100,000 and pay interest every January 1 and July 1.  The bonds were sold for $117,205 based on the market interest rate of 12%.  Merchant uses the effective-interest method to amortize bond discounts and premiums.  On July 1, 2011, Merchant should record interest expense (round to the nearest dollar) of A. $7,032B. $7,500C. $8,790D. $14,065

 

138. The Designer Company issued 10-year bonds on January 1, 2011. The 6% bonds have a face value of $800,000 and pay interest every January 1 and July 1.  The bonds were sold for $690,960 based on the market interest rate of 8%.  Designer uses the effective-interest method to amortize bond discounts and premiums.  On July 1, 2011, Designer should record interest expense (round to the nearest dollar) of A. $27,638B. $24,000C. $48,000D. $55,277

 

139. If a company borrows money from a bank as an installment note, the interest portion of each annual payment will: A. equal the interest rate on the note times the carrying amount of the note at the beginning of the period.B. remain constant over the term of the note.C. equal the interest rate on the note times the face amount.D. increase over the term of the note.

 

140. On the first day of the fiscal year, Hawthorne Company obtained a $ 88,000, seven-year, 5% installment note from Sea Side Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would record to make the first annual payment due on the note would include: A. a debit to Cash of $15,208B. a credit to Notes Payable for $10,808C. a debit to Interest Expense for $4,400D. a debit to Notes Payable for $15,208

 

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more