14. The interest charged on a S 100,000 note payable, at the annual rate of 6%,

Question

14. The interest charged on a S 100,000 note payable, at the annual rate of 6%, on a 60-day note would be A) $6,000. B) $3,333. C) $1,500. D) $1,000. 15. A $1,000 face value bond with a (discounted) quoted price of 98 is selling for A) $1,000. B) $980. C) $908. D) $98. 16. Premium on Bonds Payable (B/P) A) has a debit balance. B) is a "Santa Claus" account. is considered to be a reduction in the cost of borrowing. C) D) is deducted from bonds payable on the balance sheet. Hernandez Corporation issues 2,000, 10-year, annual rate of 8%, $1,000 bonds dated January 1, 2015, at a discount of 98. The journal entry to record the issuance will show 17. A) (DR) debit to Cash of $2,000,000. B) (CR) credit to Discount on Bonds Payable for $40,000. (CR) credit to Bonds Payable for $2,040,000. C) D) (DR) debit to Cash for $1,960,000 18, ward Corporation issues 5,000, 10-year, annual rate of 8%, S 1,000 bonds dated January 1, 2015, at a premium of 103. The journal entry to record the issuance will show a A) (DR) debit to Cash of $5,000,000. B) (CR) credit to Premium on Bonds Payable for $150,000. C) (CR) credit to Bonds Payable for $5,030,000. D) (CR) credit to Cash for $5,150,000. 19. Bargain Company has $1,500,000 of bonds outstanding. The unamortized premium is $19,600. If the company redeemed the bonds at a "sweetheart price" of 101, what would be the gain or loss on the redemption? A) $4,600 gain B) $4,600 loss C) $15,000 gain D) $15,000 loss Page 4

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

14)

Assuming 360 days in a year,

Interest payable on a note

= Principal x Rate x Time / 360 days

Where,

Principal = $100,000

Rate = 6%

Time = 60 days

So, Interest

= $100,000 x 6% x 60 / 360

= $1,000

So, option D is the correct option

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