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Question 6. (TCO D) Which of the following best describes the
cash-basis method of accounting for warranty costs?
Expensed based on estimate in year of sale
Expensed when liability is accrued
Expensed when warranty claims are certain
Expensed when incurred
Question 7. (TCO D) The term used for bonds that are unsecured
regarding principal is
junk bonds.
debenture bonds.
in-debenture bonds.
callable bonds.
Question 8. (TCO D) On November 1, Year 1, Dixon Corporation
issued $800,000 of its 10-year, 8% term bonds dated October 1,
Year 1. The bonds were sold to yield 10%, with total proceeds of
$700,000 plus accrued interest. Interest is paid every April 1 and
October 1. What amount should Dixon report for interest payable
in its December 31, Year 1 balance sheet?
$17,500