Long Term Liabilities

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Long Term Liabilities Questions and Answers

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If the debt is reduced, what is the corresponding transaction on the balance sheet?
How does changing a short term to long term note affect the balance sheet?
What is an effect on financial statements when you issue a bond to raise capital?
What are notes and lease payable to others on financial statements?
What will be the long term liability for a business loan of $100,000?
Explain why is the distinction of noncurrent liabilities important.
How to calculate the current portion of long term debt based on GAAP?
Where in the financials will mortgage payment be reflected?
What is the difference between a long term debt and the current portion of long term debt?
What is the main difference between notes payable and bonds payable?
What might cause long-term interest rates to rise in late 2020, even though currently the Reserve Bank's interest rate is almost zero?
On August 1, 2019, The Resort at Mill Lake, Inc., purchased inventory costing $46,000 by signing a 9?%, six-month, short-term note payable. The company will pay the entire note (principal and inter...
On January 1, 2018, Earnest Company purchased equipment and signed a six-year mortgage note for $194,000 at 15%. The note will be paid in equal annual instalments of $51,262, beginning January 1, 2...
On January 1, 2018, Benbrook Company purchased equipment and signed a six-year mortgage note for $97,000 at 15%. The note will be paid in equal annual installments of $25,631, beginning January 1,...
The following transactions of Smith Pharmacies occurred during 2016 and 2017: 2016 Mar. 1 Borrowed $240,000 from Naples Bank. The eight-year 7% note requires payments due annually, on March 1. Each...
During 2018, Raines Umbrella Corp had sales of $750,000 Cost of goods sold, administrative and selling expenses, and depreciation expenses were $540,000, $85,000, and $190,000, respectively. In add...
On December 31, 2013, our company signed a lease for some equipment having an eight-year useful life. The lease payments are made annually, beginning at the signing date. Title does not transfer to...
What are some of the most create ways to deal with debt?
A company has an agreement with a bondholder that prevents it from selling several of its coal-fired power plants. However, recent regulatory changes have made these plants less profitable and the...
At December 31, 2017, Headland Company has outstanding three long-term debt issues. The first is a $1,680,000 note payable which matures June 30, 2020. The second is a $5,210,000 bond issue which m...
The following section is taken from Mareska's balance sheet at Decemberi31, 2017. Current liabilities Interest payable $51,500 Long-term liabilities Bonds payable (8%, due January 1, 2021) 550,0...
The adjusted trial balance for Karr Farm Corporation at the end of the current year contained the following accounts. Interest Payable $9,500 Lease Liability 87,000 Bonds Payable, due 2022 177,000...
Paris Electric sold $3,300,000, 10%, 10-year bonds on January 1, 2017. The bonds were dated January 1 and pay interest annually on January 1. Paris Electric uses the straight line method to amortiz...
Presented here are long-term liability items for Skysong, Inc. at December 31, 2017. Bonds payable (due 2021) $920,000 Notes payable (due 2019) 84,000 Discount on bonds payable 23,000 Prepare the...
Teal Mountain Inc. issues a $590,000, 10%, 10-year mortgage note on December 31, 2017, to obtain financing for a new building. The terms provide for annual installment payments of $96,020.
Splish Brothers Inc. issues $268,000, 10-year, 7% bonds at 97. Prepare the journal entry to record the sale of these bonds on March 1, 2017.
May 1: Purchased office equipment for $15,000, paying $3,000 down and signing a 2-year, 12% (annual rate) note payable for the balance. The office equipment is expected to have a useful life of 10...
The cost of debt is defined as the: a. annual interest divided by the current price b. pre-tax change in the face value of a bond over time c. aftertax change in the face value of a bond over time...
Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, an...
Randle Inc. issues $300,000, 10-year, 8% bonds at 98. 1. Prepare the journal entry to record the sale of these bonds on March 1, 2019. 2. Prepare entry for bonds issued.
The adjusted trial balance for Sandhi!! Farm Corporation at the end of the current year contained the following accounts. Interest Payable $9,500 Lease Liability 85,900 Bonds Payable, due 2025 175...
When a bond is issued between interest payment dates, the issuer of the bond will receive an interest payment from the buyer at the time that the bonds are issued. True False
Finney Company borrowed $1,600,000 from BankTwo on January 1, 2016 in order to expand its mining capabilities. The five-year note required annual payments of $416,698 and carried an annual interest...
On January 1, Year 1, the Mahoney Company borrowed $324,000 cash from Sun Bank by issuing a five-year 8% term note. The principal and interest are repaid by making annual payments beginning on Dece...
Nordic Company issued bonds with the following provisions Nordic Company issued bonds with the following provisions: Maturity value: $60,000,000. Interest: 7.9% per annum payable semi-annually each...
On January 1, 2017, Howard Corporation signed a $500,000, 6%, 5-year mortgage note that is payable in annual installments of $118,698 every January 1. On December 31, 2017, the unpaid principal bal...
Explain the benefits to financial statement users when accountants separate the debt and equity features of hybrid debt securities. Why is this necessary and what might impact the way a user will...
On the first day of the fiscal year, a company issues a $3,800,000, 9%, 10-year bond that pays semiannual interest of $171,000 ($3,800,000 x 9% x 1/2), receiving cash of $3,345,886. Journalize the...
Mar. 1 (2014): Borrowed $360,000 from Lessburg Bank. The six year, 10% note requires payments due annually on March 1. Each payment consists of $60,000 principal plus one year's interest. Mar 1. (...
What is the market price of a 200,000, 10 year, 9% bond issue sold to yield an effective interest rate of 7% if interest is paid semiannually? (Do not round any intermediary calculations, and round...
Only July 1, Shady Creek Resort borrows $330,000 cash by signing a 10-year, 9% installment note requiring equal payments each June of 51,421. What is the journal entry to record the first annual pa...
Spring Designs & Decorators issued a 120-day, 4% note for $60,000, dated April 13 to Jaffe Furniture Company on account. a. Determine the due date of the note. b. Determine the maturity value of th...
Your company sells $55,000 of one-year, 10% bonds for an issue price of $46,500. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of what?
At December 31, 2017, Culver Company has outstanding three long-term debt issues. The first is a $2,120,000 note payable which matures June 30, 2020. The second is a $6,020,000 bond issue which mat...
A $4,000, 2%, 10-year bond at 96 held to maturity. Straight line method of amortization is used for both premiums & discounts. What is the net cash received over the life of the bond investment?
The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2010. The bonds are dated January 1, 2010, and mature ten years from that date. Straight-line amortization is used. Interest is paid...
Margaret Lindley paid $15,010 of interest on her $300,100 acquisition debt for her home (fair market value of $500,100), $1,010 of credit card interest, and $3,010 of margin interest for the purcha...
Why is it important to classify liabilities into short-term and long-term? Include examples of short and long-term liabilities in your response. Explain in detail.
Yanik Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2020, at 97. The journal entry to record the issuance will show a: A. debit to Discount on Bonds Payable for $150,000. B....
Prepare journal entries for the below transactions. a. Borrowed cash from a bank and signed a note for $11,900. b. Paid the bank the amount borrowed in (a). c. Purchased $9,800 of equipment, payin...
Ownbey Corporation purchased debt investments for $57,000 on January 1, 2017. On July 1, 2017, Ownbey received cash interest of $3,800. Journalize the purchase and the receipt of interest. Assume t...
The company made payments of $176 on its debt obligations, and took an additional $610 in debt during the year. What would long term debt be, if it was 5,483 in 2017 and 5,900 in 2018?
Clark Co. issues $400,000 of 8% bonds due in 10 years with interest payable semiannually. At the time of issue, the market rate for such bonds is 9%. What is the issue price of the bond?
NYY Corp., a calendar-year firm, sold equipment to Red Sox Nation, Inc. on January 1, 2010, and received in return a note, due on December 31, 2013, with a face value of $ 1,000,000, and bearing in...
On 1/1/X1, Downton Inc. financed the purchase of a building by issuing a $500, 000, 9%, 9-year, mortgage note payable. The note will be paid back in equal annual installment payments of $ 83, 400 o...
If the cost of equity rises as the amount of debt increases why don't financial managers use as little debt as possible to keep the cost of equity down?
If a firm went from zero debt to successively higher levels of debt, why would you expect its stock price to first rise, then hit a peak, and then begin to decline?
A) From the standpoint of the borrower, is long-term or short-term credit riskier? Explain. B) Would it ever make sense to borrow on a short term basis if short term rates were above long-term?
Hicks Health Clubs, Inc., expects to generate an annual EBIT of $500,000 and needs to obtain financing for $1,000,000 of assets. Their tax bracket is 40%. If the firm goes with a short-term financi...
What is a legal agreement, also called the deed of trust, between the corporation issuing bonds and the bondholders that establish the terms of the bond issue? A. Indenture B. Debenture C. Bond D....
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