14. On August 1, 2017, Paige\'s Dance Company borrows $45,000 from Adirondack Ba

Question

14. On August 1, 2017, Paige's Dance Company borrows $45,000 from Adirondack Bank on a note. What amount of interest expense will be accrued on December 31, 2017? A. $900 B. $2,025 C. $1,125 D. $1,500 E. $2,700 9-month, 6% 15. On September 1,2017, a compamy istt interest at the maturity date, N ssued a $50,000, 6-month, 9% note payable to purchase a piece of the he company pays the note with interest at the maturity date, March 1, 2018. The entries to record payment at the maturity date of the note include a: A. debit to Interest Expense for $750 B. credit to Interest Payable for $1,500. C. debit to Interest Expense for $2,250. D. debit to Interest Expense for $1,500. E. credit to Notes Payable for $50,000. 16. On December 1, 2017, Darin Company received $3.600 from Berke Company for rent of an office owned by Darin Company. The payment covers rent for the period from December 1,2017 through March 31, 2018. Darin Company recorded journal entry on December 31 would include a: A. debit to Cash of $3,600. B. credit to Unearned Rent Revenue of $900. this as Unearned Rent Revenue when it was received on December 1-The adjusting C. credit to Rent Revenue of $3,600. D, credit to Rent Revenue of $900. E. debit to Unearned Rent Revenue of $3,600. 17. Carlson Inc. issues 20-year bonds with a maturity value of $200,000. If the bonds are issued at a discount, A. the stated interest rate is greater than the market interest rate. B. the stated interest rate and the market interest rate are the same. C. the market interest rate is greater than the stated interest rate. D. no relationship exists between the stated interest rate and the market interest rate. 18. On the balance sheet, the account Discount on Bonds Payable is: A. classified as a stockholders' equity account. B. classified as an asset account. C. added to Bonds Payable. D. classified as a contra-liability account. E. reflected as a long-term liability account.

Explanation / Answer

14. Ans: c

Explanation:

The formula to calculate interest is P x r x t

"P" = Principal = 45000

"r" = the rate of interest 6% = 0.06

"t"= time = 5 month (Aug-Dec) = 5/12 =0.417

45000 x 0.06 x 0.417 = $ 1125

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