Fill in the blank with the correct answer from the textbook.1. A current liability that represents cash collected in advance of earning the

related revenue is called ____________________________________________.

2. Amounts owed to suppliers for goods and services that have been provided to

the entity on credit are called ______________________________________.

3. The portion of long-term debt that is to be paid within one year of the balance

sheet date is reclassified from the non-current liability section of the balance

sheet and called ______________________________________________________.

4. Total wages earned by employees for a payroll period including bonuses and

overtime are called _______________________. From this amount, deductions and

withholdings are subtracted to arrive at the _____________________________, which

is the amount recorded on the company’s balance sheet as a wages payable.

5. In order for a contingent liability to be recorded in a company’s balance sheet,

it must be both _________________________ and ____________________________.

6. When a bond’s stated rate is lower than the market rate, the bond is issued at a

______________________________. When a bond’s stated rate is higher than the

market rate, the bond is issued at a ______________________________.

Complete the problems, and show your work.

7. On Jan 1, 2023, Kayce Co. obtained a 6-month loan from its bank for $4,000,000

with an interest rate of 5%. Calculate the total interest expense due.

8. Dutton Inc. has the following payroll information for the year ended 12/31/23.

FICA is calculated at 7.65% of gross pay. Calculate the missing information.

Gross pay

$400,000

FICA tax withholdings

?

Income tax withholdings

$30,000

Group health insurance

$9,400

Employee 401K contributions

?

Total deductions

$80,000

Net pay

?

9. On January 1, 2023, $2 million worth of 4-year bonds with a stated rate of 6%

were issued; interest is paid semi-annually on June 30th and Dec 31st. The market

interest rates were 5% when the bonds were issued.

a. Calculate the annual interest payment on the bonds.

b. Calculate the amount of interest paid on each semi-annual payment.

c. Calculate the total amount of interest to be paid over the 4 years.

d. Were the bonds issued at a premium or a discount?

10. On January 1, 2023, $10 million worth of 5-year bonds with a stated rate of 5%

were issued; interest is paid quarterly on March 31, June 30th, Sept 30th, and Dec

31st. The market rates were 7% when the bonds were issued.

a. Calculate the annual interest payment on the bonds.

b. Calculate the amount of interest paid on each quarterly payment.

c. Calculate the total amount of interest to paid over the 5 years.

d. Were the bonds issued at a premium or a discount?

1. On January 1, 2020, $1 million worth of 10-year bonds with a stated rate of 8% were issued; interest is paid semi-annually on June 30th and Dec 31st.

The market interest rates were 9% when the bonds were issued.

$

80,000

$

40,000

$

800,000

discount

a. Calculate the annual interest payment on the bonds.

b. Calculate the amount of interest paid on each semi-annual payment.

c. Calculate the total amount of interest to be paid over the 10 years.

d. Were the bonds issued at a premium or a discount?

2. On January 1, 2019, $2 million worth of 5-year bonds with a stated rate of 12% were issued; interest is paid quarterly on March 31, June 30th, Sept 30th, and Dec 31st.

The market rates were 10% when the bonds were issued.

$

240,000

$

60,000

$ 1,200,000

premium

a. Calculate the annual interest payment on the bonds.

b. Calculate the amount of interest paid on each quarterly payment.

c. Calculate the total amount of interest to paid over the 5 years.

d. Were the bonds issued at a premium or a discount?

#7.2

gross pay

net pay

28,600

20,400 Payroll Liab

FICA

Inc Tax

Insur

2,000

5,000

1,200

Payroll Withholdings Liab

#7.28

8,200

Gross Pay

FICA

Inc Tax

Insur

Pension

Total Ded

Net Pay

172,000

13,158

20,640

2,540

5,312

41,650

130,350

7.65%