1. A current liability is a debt that can reasonably be expected to be paid

a. within one year or the operating cycle, whichever is longer.

b. between 6 months and 18 months.

c. out of currently recognized revenues.

d. out of cash currently on hand.

2. Brick Bank agrees to lend Tag Software Company $250,000 on January 1. Tag Software Company signs a $250,000, 10%, 9-month note. What is the adjusting entry required if Tag Software Company prepares financial statements on March 31?

a. Interest Expense.................................................................... 5,625

Interest Payable............................................................ 5,625

b. Interest Expense.................................................................... 5,625

Cash............................................................................. 5,625

c. Interest Payable..................................................................... 5,625

Cash............................................................................. 5,625

d. Interest Payable..................................................................... 5,625

Interest Expense........................................................... 5,625

3. On October 1, 2020, Roberts Construction Company borrows $100,000 from Carman Bank on a 3-month, $100,000, 8% note. The entry by Roberts Construction Company to record payment of the note and accrued interest on January 1,2021 is (assume a calendar year for Roberts)

a. Notes Payable....................................................................... 102,000

Cash............................................................................. 102,000

b. Notes Payable....................................................................... 100,000

Interest Payable..................................................................... 2,000

Cash............................................................................. 102,000

c. Notes Payable....................................................................... 100,000

Interest Payable..................................................................... 2,000

Cash............................................................................. 102,000

d. Notes Payable....................................................................... 100,000

Interest Expense.................................................................... 2,000

Cash............................................................................. 102,000

4. On January 1, 2020, Rick Corporation issued $5,000,000, 10-year, 8% bonds at 98. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2020 is

a. Cash...................................................................................... 5,000,000

Bonds Payable............................................................. 5,000,000

b. Cash...................................................................................... 4,900,000

Bonds Payable............................................................. 4,900,000

c. Cash...................................................................................... 4,900,000

Discount on Bonds Payable.................................................. 100,000

Bonds Payable............................................................. 5,000,000

d. Premium on Bonds Payable.................................................. 100,000

Cash...................................................................................... 4,900,000

Bonds Payable............................................................. 5,000,000

Important note:

PLEASE SHOW WORK FOR ALL QUESTIONS!