1. On January 1, Year 1, Civic Company borrowed $200,000 on a 10-year, 7% installment note payable. The terms of the note require Civic to pay 10 equal payments of $25,000 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, Year 1 is _____.

a. debit Interest Expense, $14,000; debit Notes Payable, $11,000; credit Cash, $25,000

b. debit Notes Payable, $14,000; debit Interest Expense, $11,000; credit Cash, $25,000

c. debit Notes Payable, $25,000; credit Cash, $25,000

d. None of these are correct.

2. Any unamortized premium is reported on the _____as an addition to the face amount of the bonds.

a. income statement

b. balance sheet

c. statement of cash flows

d. None of these are correct.

3. Any portion of the bonds or notes that is due within one year is reported as _____.

a. current liability

b. noncurrent liability

c. current assets

d. None of these are correct.

4. The number of times interest charges are earned is calculated as _____.

a. Income Before Income Taxes Interest Expense

b. (Income Before Income Taxes + Interest Expense) Interest Expense

c. Interest Expense Income Before Income Taxes

d. None of these choices are correct.

5. An increase in the number of times interest charges are earned from one year to the next would be considered _____.

a. unfavorable

b. favorable

c. irrelevant

d. None of these choices are correct.

6. The current value of a future sum of money or stream of cash flows given a specified rate of return is known as _____.

a. future value

b. present value

c. future value annuity

d. present value annuity

7. If $1,000 was deposited today at a rate of 15%, its future value in one year would be _____.

a. $1,150

b. $1,000

c. $1,500

d. $1,510

8. The entry to record the first interest payment and the related amortization for bonds issued at a discount includes a_____.

a. debit to Discount on Bonds Payable

b. credit to Discount on Bonds Payable

c. credit to Interest Expense

d. debit to Cash

9. The entry to record the first interest payment and the related amortization for bonds issued at a premium includes a _____.

a. debit to Premium on Bonds Payable

b. debit to Cash

c. credit to Premium on Bonds Payable

d. credit to Interest Expense