Question 1. Bedford Falls Savings and Loan agrees to lend the Mr. Potter $1,000 on April 1. The loan is a 3 month note that requires Mr. potter to pay 4% interest. Provide the following journal entries Mr. Potter makes on his books:

Adjusting journal entry on April 30th if Bedford Falls Savings and Loan is required to file quarterly financial statements.

(a) Debit Int. Exp $40, Credit Cash $40

(b) Debit Int. Exp $3, Credit Cash $3

(c) Debit Int. Exp $40, Credit Int. Pay $40

(d) Debit Int. Exp $3, Credit Int. Pay $3

Question 2. Bedford Falls Savings and Loan agrees to lend the Mr. Potter $1,000 on April 1. The loan is a 3 month note that requires Mr. potter to pay 4% interest. Provide the following journal entries Mr. Potter makes on his books:

Journal entry on June 30th when the note is paid off.

(a) Debit N/P 1,000, Int. Exp 3, Int. Pay 3, Credit Cash 1,006

(b) Debit N/P 1,000, Int. Pay 3, Int. Exp 6, Credit Cash 1,009

(c) Debit N/P 1,009, Int. Exp 3, Int. Pay 6, Credit Cash 1,009

Question 3. If the market interest rate for a bond is lower than the stated interest rate, the bond will sell at:

(a) A callable option of the holder

(b) A premium

(c) A discount

Question 4. The adjusted trial balance for Bedford Falls Savings and Loan at the end of the current year, 1942, had the following account balances.

3 Year Bond Payable, 6%$300

Bond Interest Payable$75

Discount on Bonds Payable$ 50

Mortgage Payable ($20 due currently)$500

Taxes Payable (due Jan. 15, 1943)$150

Notes Payable (3 month)$200

What is the amount of current liabilities on the balance sheet?

(a) $420

(b) $475

(c) $445

(d) $490

Question 5. Viking Company borrowed $500,000 from the credit union to acquire farm equipment on January 1, 2015. The 10-year, 4% note required annual payments of $61,645 made on 12/31.

Using the information above, what is the journal entry on January 1, 2015?

(a) Debit M/P $500,000, Credit Cash $500,000

(b) Debit Equipment $500,000, Credit Cash $500,000

(c) Debit Equipment $500,000, Credit M/P $500,000

(d) Debit Cash $500,000, Credit Equipment $500,000