intermediate accounting 2 exam 2 conceptual grind

Unamortized premium of bonds payable

Classified as a long-term liability if $3,000 will be amortized in the next year.

Bank loans payable due March 10, 2024 for a winery

Classified as a current liability if paid from sales revenue.

Serial bonds of $1,000,000 with $200,000 due each July 31

Classified as both a current liability and a long-term liability.

Amounts withheld for income taxes

Classified as a current liability.

Note payable due January 15, 2023 with operating cycle greater than one year

Classified as a current liability.

Note payable due January 15, 2023

Classified as a long-term liability.

Credit balances in customers’ accounts from returns and allowances

Classified as a current liability.

Bond payable of $2 million maturing on June 30, 2021

Classified as a current liability.

Overdraft of $1,000 in a bank account

Classified as a current liability if no other balances are at the bank.

Deposits made by customers who ordered goods

Classified as a current liability.

Discount on Bonds Payable

Reported on the balance sheet.

Interest Expense with credit balance

Reported on the balance sheet.

Unamortized bond issue costs

Reported on the balance sheet.

Gain on repurchase of debt

Reported on the income statement.

Mortgage payable paid in equal amounts over the next 3 years

Reported on the balance sheet.

Debenture bonds payable maturing in 5 years

Reported on the balance sheet.

Note payable due in 4 years

Reported on the balance sheet.

Premium on Bonds Payable

Reported on the balance sheet.

Bond payable due in 3 years

Reported on the balance sheet.

Interest payable from May 1 to June 1 when bonds sold on June 1

Increases the cash received by the issuer.

Journal entry when bonds are issued between interest dates

Includes a credit to interest expense.

Effective interest method of bond discount or premium amortization

Periodic interest expense calculated as market rate times the beginning of period carrying amount.

Bonds issued at a premium

Indicates the nominal rate of interest exceeded the market rate.

Interest expense when bond sells at a premium

Less than the bond interest payment.

Interest expense comparison between effective interest method and straight line

The same total amount as straight line interest expense.

Interest expense in earlier years with straight line amortization vs effective interest

Exceeds what it would have been.

Journal entry for bonds issued at 102 resulting in a premium on bonds payable

Includes debit cash for more than the face value, credit bonds payable and premium on bonds payable.

Condition to disregard revenue guidance for contracts

When each party can unilaterally terminate the contract without compensation.

Indication customer has NOT taken control of a good or service

Customer has no significant risks or rewards of ownership.

Consignee recording of transaction in a consignment sale

Records a payable when consigned merchandise is sold.

Revenue and gross profit recognition under percentage of completion method

Recognized each period during the contract based on progress.

Reporting of billings on construction in process before completion of a long-term contract

Reported net, as a current asset if a debit balance, and as a current liability if a credit balance.