ACCT 553 STUDY Great Stories /acct553study.com ACCT 553 STUDY Great Stories /acct553study.com | Page 5

material but rather stable warranty repair and replacement costs.
Any liability for the warranty (Points: 5)
9. (TCO D) Jenkins Corporation has $2,500,000 of short-term debt
it expects to retire with proceeds from the sale of 75,000 shares of
common stock. If the stock is sold for $20 per share subsequent to
the balance sheet date, but before the balance sheet is issued, what
amount of short-term debt could be excluded from current
liabilities? (Points: 5)
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 they may lose the
case. The attorneys estimated that there is a 40% chance of losing.
If this is the case, their attorney estimated that the amount of any
payment would be $500,000. What is the required journal entry as a
result of this litigation? (Points: 5)
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 (Points: 5)
12. (TCO D)When the interest payment dates of a bond are May 1
and November 1, and a bond issue is sold on June 1, the amount of
cash received by the issuer will be (Points: 5)
13. (TCO D) Feller Company issues $20,000,000 of ten-year, 9%
bonds on March 1, 2010 at 97 plus accrued interest. The bonds are
dated January 1, 2010, and pay interest on June 30 and December
31. What is the total cash received on the issue date? (Points: 5)
14. (TCO D) A company issues $20,000,000, 7.8%, 20-year bonds to
yield 8% on January 1, 2010. Interest is paid on June 30 and
December 31. The proceeds from the bonds are $19,604,145. What
is interest expense for 2011, using straight-line amortization?
(Points: 5)