Accounting 304 Exam 1 Questions and 100% Correct Answers Bonds payable of $12,000,000 maturing January 10, 2027. CORRECT ANSWER - Long -
term liability as amount is due more than 1 year. Unamortized discount on bonds payable of which $8,500 will be amortized during the next year. CORRECT ANSWER - Valuation account relating to the long -term liability, bonds payable (sometimes referred to as a contra account). The $8,500 would also be reported as long -term, Serial bonds payable $6,000,000, of which $500,000 are due each December 1. CORRECT ANSWER - Current liability, $500,000; long -term liability, $5,500,000 Bank loans payable due May 10, 2029. (The Company's timber products requires 4 years of growth before harvesting.) CORRECT ANSWER - Long -term liability if assets not classified as current will be used to satisfy th e liabilities. Current liability if current assets are used to satisfy the debt as this company has a long operating cycle. Notes payable due Dec 15, 2026. CORRECT ANSWER - Current liability, due within one year. Credit balances in customer's accounts ari sing from returns and allowances after collection in full of account. CORRECT ANSWER - Current liability Deposits made by customers who have ordered goods. COR RECT ANSWER - Current liability Overdraft of $5,000 in a bank account. (No other balances are car ried at this bank.) CORRECT ANSWER - Current liability Amounts withheld from employee's wages for FICA taxes. CORRECT ANSWER - Current liability Debenture bonds payable (maturing in 5 years) CORRECT ANSWER - classify as long -
term liability on balance sheet. Premium on bonds payable CORRECT ANSWER - classify as adjunct account to Bonds Payable on balance sheet. Income bonds payable (due in 3 years) CORRECT ANSWER - classify as long -term liability on balance sheet. Callable bond (due in 7 months) CORRECT ANSWER - classify as current liability on balance sheet Notes payable (due in 4 years) CORRECT ANSWER - classify as long -term liability on balance sheet Discount on bonds payable CORRECT ANSWER - classify as contra account to bonds payable on balance sheet Mortgage payable (payable in equal amounts over next 3 years) CORRECT ANSWER - classify one -third as current liability and the remainder as long -term liability on balance sheet Gain on repurchase of debt CORRECT ANSWER - classify as part of other gains and losses on the income statement Interest expense (credit balance) CORRECT ANSWER - Reclassify to interest payable on balance sheet Regis One Company has outstanding 10,000 shares of $10 par common stock which has been issued at $42 per share. Regis One the n purchased 1,000 treasury shares at $45 per share. How does this affect the balance of assets on financial statements? CORRECT ANSWER - decreases Regis One Company has outstanding 10,000 shares of $10 par common stock which has been issued at $42 per sha re. Regis One then purchased 1,000 treasury shares at $45 per share. How does this affect the balance of liabilities on financial statements? CORRECT ANSWER - no effect Regis One Company has outstanding 10,000 shares of $10 par common stock which has been issued at $42 per share. Regis One then purchased 1,000 treasury shares at $45 per share. How does this affect the balance of stockholder's equity on financial statements? CORRECT ANSWER - decrease Regis One Company has outstanding 10,000 shares of $10 p ar common stock which has been issued at $42 per share. Regis One then purchased 1,000 treasury shares at $45 per share. How does this affect the balance of paid -in capital on financial statements? CORRECT ANSWER - no effect
term liability as amount is due more than 1 year. Unamortized discount on bonds payable of which $8,500 will be amortized during the next year. CORRECT ANSWER - Valuation account relating to the long -term liability, bonds payable (sometimes referred to as a contra account). The $8,500 would also be reported as long -term, Serial bonds payable $6,000,000, of which $500,000 are due each December 1. CORRECT ANSWER - Current liability, $500,000; long -term liability, $5,500,000 Bank loans payable due May 10, 2029. (The Company's timber products requires 4 years of growth before harvesting.) CORRECT ANSWER - Long -term liability if assets not classified as current will be used to satisfy th e liabilities. Current liability if current assets are used to satisfy the debt as this company has a long operating cycle. Notes payable due Dec 15, 2026. CORRECT ANSWER - Current liability, due within one year. Credit balances in customer's accounts ari sing from returns and allowances after collection in full of account. CORRECT ANSWER - Current liability Deposits made by customers who have ordered goods. COR RECT ANSWER - Current liability Overdraft of $5,000 in a bank account. (No other balances are car ried at this bank.) CORRECT ANSWER - Current liability Amounts withheld from employee's wages for FICA taxes. CORRECT ANSWER - Current liability Debenture bonds payable (maturing in 5 years) CORRECT ANSWER - classify as long -
term liability on balance sheet. Premium on bonds payable CORRECT ANSWER - classify as adjunct account to Bonds Payable on balance sheet. Income bonds payable (due in 3 years) CORRECT ANSWER - classify as long -term liability on balance sheet. Callable bond (due in 7 months) CORRECT ANSWER - classify as current liability on balance sheet Notes payable (due in 4 years) CORRECT ANSWER - classify as long -term liability on balance sheet Discount on bonds payable CORRECT ANSWER - classify as contra account to bonds payable on balance sheet Mortgage payable (payable in equal amounts over next 3 years) CORRECT ANSWER - classify one -third as current liability and the remainder as long -term liability on balance sheet Gain on repurchase of debt CORRECT ANSWER - classify as part of other gains and losses on the income statement Interest expense (credit balance) CORRECT ANSWER - Reclassify to interest payable on balance sheet Regis One Company has outstanding 10,000 shares of $10 par common stock which has been issued at $42 per share. Regis One the n purchased 1,000 treasury shares at $45 per share. How does this affect the balance of assets on financial statements? CORRECT ANSWER - decreases Regis One Company has outstanding 10,000 shares of $10 par common stock which has been issued at $42 per sha re. Regis One then purchased 1,000 treasury shares at $45 per share. How does this affect the balance of liabilities on financial statements? CORRECT ANSWER - no effect Regis One Company has outstanding 10,000 shares of $10 par common stock which has been issued at $42 per share. Regis One then purchased 1,000 treasury shares at $45 per share. How does this affect the balance of stockholder's equity on financial statements? CORRECT ANSWER - decrease Regis One Company has outstanding 10,000 shares of $10 p ar common stock which has been issued at $42 per share. Regis One then purchased 1,000 treasury shares at $45 per share. How does this affect the balance of paid -in capital on financial statements? CORRECT ANSWER - no effect
