Question

1.) On September 1, 2018, Daylight Donuts signed a $100,000, 9%, six-month note payable with the amount borrowed

plus accrued interest due six months later on March 1, 2019. Daylight Donuts should report interest expense at December 31, 2018, for:

A) $0.

B) $1,500.

C) $3,000.

D) $4,500.

2.) On December 1, 2018, Old World Deli signed a $300,000, 5%, six-month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2019. Old World Deli records the appropriate adjusting entry for the note on December 31, 2018. What amount of cash will be needed to pay back the note payable plus interest on June 1, 2019?

A) $300,000.

B) $301,250.

C) $306,250.

D) $307,500.

3.) Camp Elim obtains a $125,000, 6%, five-year loan for a new camp bus on January 1, 2018. If the monthly payment is $2,416.60, by how much will the carrying value decrease when the first payment is made on January 31, 2018?

A) $1,791.60

B) $625.00

C) $2,416.60

D) $1,000.60

4.) Some Company purchased a piece of equipment by paying $5,000 cash. They also incurred a shipping cost of $400 to get the equipment to its factory. The fair value of this equipment is $7,000. For what amount should Bad Brads BBQ record the equipment?

A) $5,000.

B) $5,400.

C) $7,000.

D) $7,400.

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