Auditing > QUESTIONS & ANSWERS > Applied Auditing | Download for quality grades | (All)

Applied Auditing | Download for quality grades |

Document Content and Description Below

Audit of Liabilities (Posttest) PROBLEM 1 In your initial audit of National Finance Company, you find the following ledger account balances. Account Date Source Debit Credit 12% Bonds Payable – ... Due 10 years from 01-01-2009 01.02.09 CR 5,000,000 Bonds Payable Redeemed 10.01.12 CD 1,110,000 Bond Discount 01.02.09 CR 529,697 Bond Interest Expense 01.01.12 CD 300,000 07.01.12 CD 300,000 The bonds were redeemed for permanent cancellation on October 1, 2012 at 108 plus accrued interest. Based on your computation, the bonds were originally issued to yield 14%. 1. The adjusted balance of bonds payable as of December 31, 2012 a. 5,000,000 b. 4,000,000 c. 5,500,000 d. 4,800,000 2. The adjusted balance of bond discount on December 31, 2012 a. 316,702 b. 317,702 c. 320,150 d. 317,150 3. The bond interest expense for the year 2012 a. 605,066 b. 630,589 c. 608,066 d. 476,766 4. The loss on bond redemption a. 80,000 b. 163,575 c. 161,500 d. 165,650 5. The balance of interest payable on December 31, 2012 a. 240,000 b. 480,000 c. 560,000 d. 280,000 6. The adjusting entry on December 31, 2012 will include: a. A credit to Bonds Payable for 1,000,000 b. A debit to Interest Expense of 630,589 c. A credit to Bond Discount of 317,150 d. A debit to Retained Earnings for 392,430 [Show More]

Last updated: 2 years ago

Preview 1 out of 3 pages

Buy Now

Instant download

We Accept: