FA chapter 9 quick check

Which of the following is not an estimated liability?

The estimated warranty obligation at the end of the financial year is best described as
which of the following?

Crank the Volume grants a 120-day warranty on all stereos. Historically, approximately
1% of all units sold prove to be defective, requiring an average repair bill of $100. Sales in
March are $472,500 for 4,500 units. In March, $3,900 of defective units are returned for
replacement. What entry must Crank the Volume make at the end of March to record the
warranty expense?

Excursion Camera Co. was organized to sell a single product that carries a 45-day warranty
against defects. Engineering estimates indicate that 4% of the units sold will prove defective and require an average repair cost of $25 per unit. During Expedition’s first month of
operations, total sales were 800 units; by the end of the month, 15 defective units had been
repaired. The liability for product warranties at month-end should be

A contingent liability should be recorded in the accounts

An unsecured bond is a

. The Discount on Bonds Payable account

The discount on a bond payable becomes

A bond that matures in installments is called a

The carrying value of Bonds Payable equals

A corporation issues bonds that pay interest each May 1 and November 1. The corporation’s
December 31 adjusting entry may include a

McCabe Corporation issued $560,000 of 7% 10-year bonds. The bonds are dated and sold
on January 1, 20X1. Interest payment dates are January 1 and July 1. The bonds are issued
for $521,724 to yield the market interest rate of 8%. Use the effective-interest method for
questions 12–16.

What is the amount of interest expense that McCabe Corporation will record on July 1,
20X1, the first semi-annual interest payment date? (All amounts rounded to the nearest
dollar.)

McCabe Corporation issued $560,000 of 7% 10-year bonds. The bonds are dated and sold
on January 1, 20X1. Interest payment dates are January 1 and July 1. The bonds are issued
for $521,724 to yield the market interest rate of 8%. Use the effective-interest method for
questions 12–16.

What is the amount of discount amortization that McCabe Corporation will record on July 1,
20X1, the first semi-annual interest payment date?

McCabe Corporation issued $560,000 of 7% 10-year bonds. The bonds are dated and sold
on January 1, 20X1. Interest payment dates are January 1 and July 1. The bonds are issued
for $521,724 to yield the market interest rate of 8%. Use the effective-interest method for
questions 12–16.
What is the total cash payment for interest for each 12-month period? (All amounts
rounded to the nearest dollar.)

What is the total interest expense for the year ended December 31, 20X1?

What is the carrying amount of the bonds on the January 1, 20X2, Balance Sheet?