Please select the correct answer. Circle the letter of the best response. A five

Question

Please select the correct answer.

Circle the letter of the best response. A five-year, $100,000, 4% note payable was issued on December 31, 20X8. The note requires principal payments of $20,000 plus interest due each year beginning December 31. 20X9. The entry to record the annual payment at the end of year two on December 31, 20X0, includes A. a debit to Interest Expense for $800. B. a debit to Interest Expense for $3,200. C. a credit to Cash for $24,000. D. a credit to Notes Payable for $20,000. I. Crystal, Inc.'s trial balance shows $800,000 face value of bonds with a discount balance of $12,000. The bonds mature in 20 years. How will the bonds be presented on the balance sheet? 2. A. Bonds payable $800,000 will be listed as a long-term liability. A $12,000 discount on bonds payable will be listed as a current liability. B. Bonds payable $800,000 will be listed as a long-term liability. A $12,000 discount on bonds payable will be listed as a contra-current liability. C. Bonds payable $800,000 will be listed as a long-term liability. D. Bonds payable $788,000 (net of $12,000 discount) will be listed as a long-term liability. Dawson Company issued $400,000 of 8% serial bonds at face value on December 31, 2018. Half of the bonds mature January 1, 2021, while the other half of the bonds mature Jan 1, 2029. On December 31, 2020, the balance sheet will show which of the following? A. Bonds payable of $400,000 will be listed as a long-term liability B. Bonds payable of $400,000 will be listed as a current liability C. Bonds payable of $200,000 will be listed as a long-term liability. Bonds payable of 3. $200,000 will be listed as a current liability D. Bonds payable of $408,000 will be listed as a long-term liability. A $400.000 bond priced at 102 can be bought or issued for A. $102,000 B. $392,000. C. $402,000. D. $408,000. 5.

Explanation / Answer

Question - 1 ..........C. a credit to cash for 24000

Annual installment of 20000 + Interest expenses of 100,000 * 4% = 4000 = 24000 will be paid in cash, hence a credit to cash for 24000 is included in the entry.

Question - 2 .............B.

Principle liability of 800,000 shall continue as a long term liability. But the unamortized discount account which represents contra - liability account ( debit).

Note ........it should be contra - liability account but not contra - current liability.

Question - 3 ...........C

Bonds payable to the extent they are redeemable in the coming year are categorized as current liabilities and remaining continues to be in long term liabilities.

Question - 5 ...........D

400000 * 102% = 408000

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