1. Notes may be issued

a. to creditors to temporarily satisfy an account payable created earlier

b. when borrowing money

c. when assets are purchased

d. for all of these

2. On June 1, Davis Inc. issued an $60,800, 8%, 120-day note payable to Garcia Company Assume that the fiscal year of Garcia ends June 30. Using a 360-day year in your calculations, what is the amount of interest revenue recognized by Garcia in the following year? When required, round your answer to the nearest dollar.

a. $4,864

b. $1,230

c. $405

d. $811

3. On June 8, Williams Company issued an $83,765, 8%, 120-day note payable to Brown Industries. Assuming a 360-day year for your calculations, what is the maturity value of the note? When required, round your answer to the nearest dollar.

a. $6,701

b. $83,765

c. $90,466

d. $85,999

4. A used machine with a purchase price of $41,809, requiring an overhaul costing $9,833, installation costs of $6,615, and special acquisition fees of $32,417, would have a cost basis of

a. $139,539

b. $90,674

c. $51,642

d. $41,809

5. When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at

a. their face value

b. a discount

c. their maturity value

d. a premium

6. On July 8, Jones Inc. issued an $82,100, 9%, 120-day note payable to Miller Company. Assume that the fiscal year of Jones ends July 31. Using a 360-day year, what is the amount of interest expense recognized by Jones in the current fiscal year? When required, round your answer to the nearest dollar.

a. $944

b. $7,389

c. $472

d. $1,416

7. A building with an appraisal value of $127,085 is made available at an offer price of $150,980. The purchaser acquires the property for $37,892 in cash, a 90-day note payable for $24,353, and a mortgage amounting to $57,782. The cost basis recorded in the buyer's accounting records to recognize this purchase is

a. $150,980

b. $120,027

c. $127,085

d. $113,088