Section_Problem_Set_10_solution

Section_Problem_Set_10_solution - AEM 221 Section #10*TA...

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AEM 221 Section #10****TA ANSWER KEY!!!**** Name: Section: Multiple Choice. 1. If a bond is sold at 98%, its stated rate of interest would be A) higher than the market rate. B) lower than the market rate. C) equal to the market rate. D) unrelated to the market rate. E) None of the above is correct. 2. Accurate Numbers, Inc., issued $100,000 of 10 year, 12% bonds dated April 1, 20A, for $102,360 on April 1, 20A. The bonds pay interest on April 1 and October 1. Straight-line amortization is used by the company. What entry is needed at October 1 for the first interest payment? A) Interest expense 5,882 Premium on bonds payable 118 Cash 6,000 B) Interest expense 6,118 Discount on bonds payable 118 Cash 6,000 C) Interest expense 6,000 Premium on bonds payable 118 Cash 6,118 D) Interest expense 6,000 Cash 6,000 E) None of the above is correct. 3. Goodman Company borrowed $100,000 cash on September 1, 2004 and signed a one-year 12%, interest-bearing note payable. The required adjusting entry at the end of the accounting period, December 31, 2004 would be A) Interest expense 4,000 Interest payable 4,000 B) Interest expense 12,000 Interest payable 12,000 C) Notes payable 100,00 0 Interest expense 12,000 Cash 112,000 D) Interest payable 4,000
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Interest expense 4,000 E) None of the above is correct. 4.
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Section_Problem_Set_10_solution - AEM 221 Section #10*TA...

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