On April 1, Year 1, Halo Co. issued a $5,000 face value discount note to the Capri Bank. The note had a 12 percent discount rate and a one-year term.

8. The amount of cash Halo received on April 1, Year 1, was

a. $5,000.

b. $4,250.

c. $4,400.

d. $5,500.

9. The total carrying value of Halos liabilities on December 31, Year 1, would be

a. $5,600.

b. $5,000.

c. $5,450.

d. $4,850.

10. If Halo Co. earned $2,000 of revenue in Year 1, the amount of net income would be

a. $2,000.

b. $1,550.

c. $1,400.

d. $1,850.