Question 20

Universal Travel Inc. borrowed $498,000 on November 1, 2018, and signed a 12-month note bearing interest at 5%. Interest is payable in full at maturity on October 31, 2019. In connection with this note, Universal Travel Inc. should report interest payable at December 31, 2018, in the amount of:

$24,900.

$20,750.

$4150.

$16,600.

1 points

Question 21

Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system.

1) The company purchased $13,100 of merchandise on account under

terms 4/10, n/30.

2) The company returned $2600 of merchandise to the supplier before

payment was made.

3) The liability was paid within the discount period.

4) All of the merchandise purchased was sold for $20,200 cash.

What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements?

None. It is an asset exchange transaction.

Assets and stockholders' equity decrease by $2600.

Assets and liabilities decrease by $2496.

Assets and liabilities decrease by $2600.

1 points

Question 22

On January 1, Year 1, Weller Company issued bonds with a $300,000 face value, a stated rate of interest of 10.50%, and a 10-year term to maturity. Weller uses the effective interest method to amortize bond discounts and premiums. The market rate of interest on the date of issuance was 8.50%. Interest is paid annually on December 31.

Assuming Weller issued the bond for $325,340, what is the amount of interest expense that will be recognized during Year 3? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

$27,654

$36,028

$31,500

$26,972

1 points

Question 23

Schneider Inc. had salaries payable of $60,900 and $92,000 at the end of 2017 and 2018, respectively. During 2018, Schneider recorded $620,900 in salaries expense in its income statement. Cash outflows for salaries in 2018 were:

$528,900.

$652,000.

$620,900.

$589,800

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