Wolford Company borrowed $750,000 from U.S. Bank on January 1, 2009 in order to

Question

Wolford Company borrowed $750,000 from U.S. Bank on January 1, 2009 in order to expand its mining capabilities. The five-year note required annual payments of $195,327 and carried an annual interest rate of 9.5%. What is the amount of expense Wolford must recognize on its 2010 income statement?


A $46,555


B $59,463


C $52,694



D $71,250

Larson Company issued $500,000 of 8%, 5-year bonds at 106. Assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment point?


A $3,000


B $40,000


C $6,000


D $34,000


Wolford Company borrowed $750,000 from U.S. Bank on January 1, 2009 in order to expand its mining capabilities. The five-year note required annual payments of $195,327 and carried an annual interest rate of 9.5%. What is the amount of expense Wolford must recognize on its 2010 income statement?


A $46,555


B $59,463


C $52,694


D $71,250

Fornelli Corporation borrowed $240,000 from Central Bank on May 31, 2009. The three-year, 7% note required annual payments of $91,452 beginning May 31, 2010. Interest expense for the year ended December 31, 2009 was


A $9,800.


B $16,800.


C $11,200.


D $0

Explanation / Answer

1. b). Interest at .095 on the remaining principal. 2. c) 30,000 premium amortized over 5 years. 3. Repetition of 1. 4. a) 240,000*.07*7/12.

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