1. The bank’s temporary waiver of two violations of bank covenants

a.            Completely solves Brony’s Bikes’ problem

b.            Does not allow Brony’s Bikes loan to be classified as long-term

c.             Does not require Brony’s Bikes to remedy the violations

d.            Will certainly be extended by the bank

2. The reclassification of current portion (of long-term debt) is necessary because

a.            The reclassification assures that interest expense will be correct

b.            Comprehensive income would otherwise be misstated

c.             Allows Brony’s Bikes to borrow more money

d.            It discloses the amount to be paid on the loan within one year

3. The journal entry made on WP 14

a.            Increases income before taxes

b.            Decreased income before taxes

c.             Is and audit adjusting entry

d.            Has no effects on net income

4. WP 14 includes a recalculation of interest payable. That recalculation

a.            Indicates that Brony’s Bikes has understated interest payable

b.            Is not a normal audit procedure

c.             Indicates that Brony’s Bikes has overstated interest payable

d.            Indicates that interest payable is a reasonable amount