Which of the following statements pertaining to instalment notes with blended principal and interest payments is correct? (hint: think of a mortgage on your home) Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The portion of each instalment applied to the interest and principal will remain constant. The portion of the instalment applied to the principal will b decrease, while the portion applied to the interest will increase over time. The portion of the instalment applied to the interest will depend on prevailing market interest rates, with the difference being applied to the principal The portion of the instalment applied to the principal will d increase, while the portion applied to the interest will decrease over time. MCQ Which item listed below does not influence the issue price (present value) of a bond? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The length of time until the amounts are received b The reason the bond was issued The dollar amounts to be received d The market rate of interest MCQ If a bond is issued at a premium, the coupon rate is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a greater than the effective rate. b less than the effective rate. equal to the effective rate. d not used to determine the bond's sale price. MCQ Maui Corporation issued $200,000 of 4% five-year bonds for proceeds of $192,330. The market interest rate is 6%. Interest is paid semi-annually. How much bond interest expense is recorded on the first interest date assuming effective-interest amortization is used? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $4,000 b $3,847 $5,770 d $6,000 MCQ On January 1, 2021, Woodstock Corporation sold a four-year, $10,000, 7% bond. The interest is payable annually each December 31. The issue price was $9,668 based on an 8% effective interest rate. Assuming effective interest amortization is used, the interest expense on the 2021 income statement would be which of the following amounts (to the nearest dollar)? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. $700 b $773 C $883 d $1,547 MCQ If bonds are initially sold at a discount and the straight-line method of depreciation is used, interest expense in the earlier years will be Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. higher than it would have been had the effective interest method of amortization been used. less than it would have been had b the effective interest method of amortization been used. less than the stated rate of interest. the same as it would have been d had the effective interest method of amortization been used
