Multiple Choice (2 points each) Use the following information about PNC Bank to answer the next three questions. On September 18, 2020, PNC Bank purchased 14,000 shares of Microsoft stock for $200 per share and classified the investment as TRADING. On September 30, 2020, Microsoft stock was trading at $210 per share, and on October 31, 2020, Microsoft stock was trading at $202 per share. 1. The Investment in Microsoft will be shown on PNC Bank's September 30, 2020 Balance Sheets for: a. $2,800,000 b. $2,828,000 c. $2,870,000 d. $2,940,000 2. The Unrealized Gain or Unrealized Loss on this trading investment will be shown on PNC Bank's September 2020 Income Statement for: a. $140,000 unrealized gain b. $70,000 unrealized loss c. $28,000 unrealized gain d. $112,000 unrealized loss 3. Which of the following is TRUE about investments categorized as trading securities? a. They are purchased to be held to maturity. b. They are valued on the balance sheet at cost. c. They can consist of debt, but not equity, securities. d. Changes in their market value are reflected in net income. 4. Which of the following businesses most likely would have a large Unearned Revenue account balance at all times? a. Realtor b. Magazine publisher c. Pharmacy d. Dry cleaners a. 5. Which of the statements is FALSE: The accrual of interest on note payable results in an increase in liabilities and a decrease in cash. b. A current liability is created when a customer pays cash for services to be provided in the future. c. Current portion of long-term debt is an example of a current liability. d. Interest expense is reported under other revenues and expenses on the income statement. 6. On October 1, 2020, Nonna Corp signed a one-year, 7%, note payable for $42,000. Assuming that Nanna maintains its books on a calendar year basis, how much interest expense should be reported on the 2021 income statement? Round your answer to the nearest dollar. a. $735 b. $1,470 c. $2,205 d. $2,940 a. 7. Randal Company borrowed $105,000 cash on October 10, 2020, and signed a 120-day, 4%, note payable with interest payable at maturity. Which of the following would be the required adjusting entry on October 31, 2020? Use 360-day year and round your answer to the nearest dollar. Dr. Notes Payable 105,000 Dr. Interest Expense 245 Cr. Cash 105,245 b. Dr. Interest Expense 245 Cr. Interest Payable 245 Dr. Interest Payable 1,400 Cr. Interest Expense 1,400 d. Dr. Interest Expense Cr. Interest Payable c. 1,400 1,400 8. Fox Company borrowed $27,000 cash on October 1, 2020, and signed a nine-month, 10%, note payable with interest payable at maturity. Assuming that adjusting entries have been made during the year, the amount of accrued interest payable to be reported on the December 31, 2020 balance sheet is? Round your answer to the nearest dollar. a. $675 b. $900 c. $1,350 d. $2,025 e. $2,700 9. Light Company borrowed $24,000 cash on June 1, 2020, and signed an eight-month, 9%, note payable with interest payable at maturity. What is the amount of total interest expense on this note? Round your answer to the nearest dollar. a. $1,080 b. $1,260 c. $1,440 d. $1,890 e. $2,160
