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1. On November 30, 2008, Crown Food bought two trucks for total of $70,000 issuing a one-year, 8% note payable, all due at maturity. Interest on this loan is stated separately. Liability for this loan as of December 31, 2008:

a. Is classified as a long-term liability if Crown Food has the intent and ability to refinance by taking out a new loan not due for several years.

b. Is equal to its maturity value.

c. Is classified as a long-term liability, since it was used to acquire noncurrent assets

d. Is equal to the book value of the two trucks that were acquired in exchange.

2. Which of given items is reported in neither income statement nor statement of cash flows?

a. Sale of marketable securities at a loss

b. Sale of marketable securities at a gain.

c. Investment of excess cash in marketable securities.

d. Adjustment of available-for-sale marketable securities owned to present market value at balance sheet date.

3. On January 1, 2006, Blair Company sold $800,000 of 10% ten-year bonds. Interest is payable semi-annually on June 30 and December 31. Bonds were sold for $708,000, priced to yield 12%. Blair records interest at effective rate. Blair must report bond interest expense for the six months ended June 30, 2006 in the amount of:

a. $48,000

b. $35,400

c. $42,480

d. $40,000

4. On November 30, 2008, Crown Food bought two trucks for total of $70,000, issuing a one-year, 8% note payable, all due at maturity. Interest on this loan is stated separately. How much should Crown Food pay lender upon maturity of this note?

a. $70,000.

b. $70,467.

c. $75,600

d. $75,133

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  • Category:- Accounting Basics
  • Reference No.:- M917487

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