1. On August 1, a $45,600, 7%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $17,375.96. The entry to record the first payment on July 31 would include:

A. Debit to Interest Expense of 3,192.00

B. Credit to cash 14,183.96

C. Credit to Notes payable of 17,375.96

D. Debit to Cash of 17,375.96

E. Debit to Notes payable of 17,375.96

2. A company borrowed cash from the bank and signed a 6-year note at 10% annual interest. The present value for an annuity (series of payments) at 10% for 6 years is 4.3553. The present value of 1 (single sum) at 10% for 6 years is 0.5645. Each annual payment equals $8,500. The present value of the note is:

A. 37,020.05 B. 20,887.00 C. 4,798.25 D. 37,784.00 E. 161,146.00

3. A company issues 7%, 7-year bonds with a par value of $300,000 on January 1 at a price of $316,944, when the market rate of interest was 6%. The bonds pay interest semiannually. The amount of each semiannual interest payment is:

A. 21,000 B. 0 C.10,500 D. 9,000 E. 18,000

4. A company issued 7%, 5-year bonds with a par value of $50,000. The market rate when the bonds were issued was 8%. The company received $47,974 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

A. 1,7500 B. 1,918.96 C. 3,500.00 D. 3,837.92 E. 2,000.00