Promissory notes cannot be transferred from party to party because they are nonnegotiable.

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:

The cost of land would not include:

Collateral from unsecured loans may be sold to offset the loan obligation if the loan is in default.

Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle requires that interest expense not be accrued on a note payable until the note is paid.

Marwick Corporation issues 8%, 5-year bonds with a par value of $1,000,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%. What is the bond’s issue (selling) price, assuming the following Present Value factors:   n=   i=   Present Value of an Annuity   Present value of $1 5   8 %     3.9927   0.6806 10   4 %     8.1109   0.6756 5   6 %     4.2124   0.7473 10   3 %     8.5302   0.7441

Martinez owns an asset that cost $87,000 with accumulated depreciation of $40,000. The company sells the equipment for cash of $42,000. At the time of sale, the company should record:

Two common ways of retiring bonds before maturity are to (1) exercise a call option or (2) purchase them on the open market.

On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the first interest payment using the effective interest method of amortization is:

All of the following statements regarding uncertainty in liabilities are true except: