1. The journal entry related to this mortgage that is done on December 31^st, 2012 has the following:

Multiple Choice

• Interest Payable credited

• Mortgage Payable credited

• Interest Expense credited

• Cash credited

• None of the other alternatives are correct

2. Jonny Walker purchases his first condominium downtown Toronto by obtaining a $200,000 mortgage loan from Borrowers Are Us Inc. Jonny Walker agrees to make monthly payments of $1,200. The interest rate applied to the unpaid balance is 6% per year. Prepare the amortization schedule to be used for this loan. What is the unpaid balance of the mortgage loan at the end of the third month?

Multiple Choice

• $199,397

• We need the effective interest rate to calculate this amount

• $200,000

• $199,800

• $199,599

3. Which of the following are factors in determining the amount of money a firm actually receives when it offers a bond issue to the market?

Multiple Choice

• The face or par value of the bond issue

• The stated or nominal interest rate

• The market interest rate

• The term to maturity

• All four statements are correct

4. If the contract rate on the bond is 13% and the market interest rate at the time of sale is 13.2%, then the bond will sell at:

Multiple Choice

• Cannot be sold in the market

• Premium

• Unable to answer with the data provided

• Par

• Discount

5. Which of the following is NOT an example of a contingency?

Multiple Choice

• The potential expense related to repair or replacing products sold under warranty

• All the other alternatives are contingencies

• Note receivable sold with recourse

• Salaries payable to top management

• An amount potentially payable to settle a lawsuit