Financial Accounting: An Integrated Statements Approach, 2nd Edition

bankruptcy protection. While the Atkins diet was initially popular because of its ap- pealing approach and relatively fast resul ...

Chapter 10 Liabilities 449 In this case, $100,000 to be received 10 years in the future is worth $55,840 today. This process of ...

In the preceding case, the periodic cash flows of $6,000 are called an annuity. An annu- ity is a series of cash payments or rec ...

Chapter 10 Liabilities 451 is 7.36009. Thus, the present value of the preceding $6,000 per year annuity using the present value ...

sell at a discount, or less than their face amount. If the market rate is lowerthan the contract rate, the bonds will sell at a ...

Chapter 10 Liabilities 453 The following journal entry records the $100,000 bonds issued at their face amount: 1/1 Present Value ...

Every six months after the bonds are issued, interest payments of $6,000 are made, beginning on June 30. As we discuss in Chapte ...

Chapter 10 Liabilities 455 Bond Discount Amortization Because a bond discount increases the effective interest rate of the bond ...

456 Chapter 10 Liabilities June 30 Interest Expense 6,359.40 Discount on Bonds Payable 359.40 Cash 6,000.00 SCF BS IS OT AT Lc S ...

Present value of face amount of $100,000 due in 5 years, at 11% compounded semiannually: $100,000 0.58543 (present value of $1 ...

the face value. A corporation may also redeem its bonds by purchasing them on the open market. A corporation usually redeems its ...

Chapter 10 Liabilities 459 DEFERRED LIABILITIES Deferred liabilities are created when a transaction delays or defers (1) the rec ...

$120,000 ($300,00040%). However, to reduce the amount owed for current income taxes, the corporation uses tax planning to reduc ...

Chapter 10 Liabilities 461 CONTINGENT LIABILITIES Some past transactions will result in liabilities if certain events occur in t ...

REPORTING LIABILITIES Liabilities are reported on the balance sheet in the order of liquidity, that is, in the or- der in which ...

Chapter 10 Liabilities 463 Coca-Cola uses the term “notes,” which is similar to a bond. Notice also that the current maturities ...

Current Ratio. Financial ratios that measure the degree to which current assets are available to satisfy current liabilities are ...

Chapter 10 Liabilities 465 The quick ratio for both companies would be computed as shown: Barnes & Noble, Inc.: $535.7$74.6 ...

Number of Times Interest Charges Are Earned $218.6$14.5 16.1 $14.5 Number of Times Interest Charges Are Earned $207.6$9.1  ...

Chapter 10 Liabilities 467 Effective Interest Rate Method of Amortization The effective interest rate method of amortizing disco ...