Question 26

Which of the following is an activity that would give rise to a short-term trade notes payable?

Question options:

	purchasing merchandise inventory on account and then requesting a 90-day extension to make payment
	purchasing land from another party and signing a one year note payable as payment
	all of these are resulting in short-term trade notes payable

Question 28

On June 30, company signs a two month note payable for 100,000 agreeing to 6% interest rate. On August 30, the due date of the note payable, what entry would the company make to pay the note and interest in full?

Question options:

	Notes Payable 100,000 Interest Expense 6,000 Cash 106,000
	Merchandise Inventory 100,000 Cash 100,000
	Notes Payable 100,000 Interest Expense 1,000 Cash 101,000

Question 29

Callable bonds may be ____.

Question options:

	Retired early at the option of the issuing corporation
	Retired early at the option of the investor
	Converted into common stock

Question 30

If the market rate is lower than the contract rate, the bonds will sell at ____.

Question options:

	A premium
	Face amount
	Cannot be determined from the facts given

Question 31

A company issues $500,000 10% bonds due in 10 years for $480,000. Which of the following is true?

Question options:

	The bonds were issued at a premium
	The market rate of interest must be higher than 10%, so investors are not willing to pay full price for our bonds
	Both b and c

Question 32

If a company issues $500,000, 6% bonds for $490,000, the entry to record the issuance of the bonds will include a ____.

Question options:

	Credit to bonds payable for $490,000
	Debit to interest expense for $10,000
	Debit to discount on bonds payable for $10,000

Question 33

The journal entry for amortizing a premium on bonds payable ____.

Question options:

	Results in a debit to premium on bonds payable and a credit to interest expense
	Results in a debit to interest expense and a credit to premium on bonds payable
	Not enough information given

Question 34

If a company redeems $500,000 of outstanding bonds with an unamortized discount on bonds payable of $20,000, and they redeem at $510,000, then they will record a gain or loss of ??? on the early redemption. Chose the best answer

Question options:

	A loss of $30,000
	A loss of $20,000
	A gain of $10,000