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notes payable. The amount of the short-term notes payable that should
be reported as current liabilities on the December 31, 2010 balance sheet
issued on March 5, 2011 is
$0.
$300,000.
$500,000.
$800,000.
Question 10. (TCO D) Tender Foot, Inc. is involved in litigation
regarding a faulty product sold in a prior year. The company has
consulted with its attorney and determined that it is possible that it may
lose the case. The attorneys estimated that there is a 40% chance of
losing. Tender Foot’s attorney estimated that if it loses, then the amount
of any payment would be $500,000. What is the required journal entry
as a result of this litigation?
Debit Litigation Expense for $500,000 and credit Litigation
Liability for $500,000.
No journal entry is required.
Debit Litigation Expense for $200,000 and credit Litigation
Liability for $200,000.
Debit Litigation Expense for $300,000 and credit Litigation
Liability for $300,000
Question 11. (TCO D) If bonds are initially sold at a discount and the
straight-line method of amortization is used, interest expense in the
earlier years will
exceed what it would have been had the effective-interest method
of amortization been used.
be less than what it would have been had the effective-interest
method of amortization been used.
be the same as it would have been had the effective-interest method
of amortization been used.
be less than the stated (nominal) rate of interest.