1) What is the effective interest rate on a 4 month, non-interest bearing note with a stated rate of 7.5% and a maturity value of $85,000?

1. 7.69%

2. 7%

3. 8%

4. 2.56%

2) On 2/1/2020, Sales Co. issued 9% bonds with a face amount of $200,000. The bonds sold for $182,841 and mature in 20 years. The effective rate for these bonds is 10%. Interest is paid semiannually on July 31 and Jan 31 each year. What amount of discount should be recorded on these bonds?

1. $20,000

2. $18,000

3. $18,284

4. $17,159

3) A future taxable amount creates a:

1. Income tax payable

2. Deferred tax asset

3. Deferred tax asset