The amount of interest paid each period on long-term liabilities remains the same, as well as the principal payments and the total payments.

Select one:

a. False

b. True

Installment payments for mortgages typically contain both an amount for principal repayment and an amount for interest.

Select one:

a. True

b. False

Trek Company signed a 9%, 10-year note for $150,000. The company paid $1,900 as the installment for the first month. What portion of the first monthly payment is interest expense?

Select one:

a. $14,400

b. $4,800

c. $1,125

d. $16,000

On March 1, 2015, Vinnie Services issued a 5% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 annual principal payments on March 1 of each year plus interest, beginning March 1, 2016. Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period. On March 1, 2016:

Select one:

a. Vinnie must accrue $5,000 of Interest Expense.

b. Vinnie will receive $5,000 as an installment payment.

c. Vinnie must accrue for the coming $5,000 as current portion of principal payment.

d. Vinnie must pay out $750 of Interest Expense to the note holder.