age 4 Eachpayment on a mortgage note payable consists of d. interest on the original balance of the loan. . reduction of loan principal only. erest on the original balance of the loan and reduction of loan principal. dinterest on the unpaid balance of the loan and reduction of loan principal 21. I a corporation issued $2,000, 000 in bonds which pay 108 annua interest, what is the annual net cash cost of this borrowing if the income tax rate is 308? a. $2,000,000. b. $60,000 c. $200,000. d. $140,000. 22. It cen $1,000 convertibl e bonds with a carrying value of $11,500 are converted into 1,500 shares of $5 par value common stock, the journal entry to record the conversion is 11,500 11,500 Common stock . b. Bonds Payable 10,000 1,500 Premium on Bonds Payable 11,500 Common Stock c. Bonds Payable . 10,000 1,500 Premium on Bonds Payable . Common Stock Paid-in Capital in Excess of Par 7,500 4,000 11,500 Discount onBonds Payable Common Stock Paid-in Capital in Excess of Par 1,500 7,500 2,500 23. Each of the following is correct regarding bonds except they are a. a form of interest-bearing notes payable. b. attractive to many investors c. issued by corporations and governmental agencies. d. sold in large denominations. 24. Stockholders of a company may be reluctant to finance expansion through issuing more equity because a. leveraging with debt is always a better idea. b. their earnings per share may decrease. c. the price of the stock will automatically decrease. d. dividends must be paid on a periodic basis