1. A one-year, $26,400, 8% note is signed on April 1. If the note is repaid on August 1 of the same year, how much interest expense is incurred? (Do not round intermediate calculations.)

a) $880

b) $2,112

c) $704

d) $528

2. Your company sells $80,000 of bonds for an issue price of $75,600. Which of the following statements is correct?

a) The bond sold at a price of 47.25, implying a premium of $8,800.

b) The bond sold at a price of 94.50, implying a discount of $4,400.

c) The bond sold at a price of 47.25, implying a premium of $4,400.

d) The bond sold at a price of 94.50, implying a discount of $8,800.

3. A company issued $350,000, 10-year, 10 % bonds at 106.25.

What is the issue price of these bonds?

a) $350,000

b) $371,875

c) $385,000

d) $328,125

4. What is the total amount of interest expense that will be recorded over the life of these bonds?

$350,000

$328,125

$371,875

$385,000

5. Your company sells $46,000 of one-year, 10% bonds for an issue price of $42,000. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

$42,000.

$46,000.

$46,600.

$50,600.