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1. On September 30, World Co. borrowed $1,000,000 on a 9% note
payable. World paid the first of four quarterly payments of $264,200
when due on December 30. In its December 31, balance sheet, what
amount should World report as note payable?
2. Gain contingencies are usually recognized in the income statement
when
3. For a bond issue which sells for less than its par value, the market
rate of interest is
4. In December year 1, Mill Co. began including one coupon in each
package of candy that it sells and offering a toy in exchange for 50
cents and five coupons. The toys cost Mill 80 cents each. Eventually
60% of the coupons will be redeemed. During December, Mill sold
110,000 packages of candy and no coupons were redeemed. In its
December 31, year 1 balance sheet, what amount should Mill report
as estimated liability for coupons?
5. When the interest payment dates of a bond are May 1 and
November 1, and the bond is issued on June 1, year 1, the amount of
interest expense for the year ended December 31, year 1, would be for
6. White Airlines sold a used jet aircraft to Brown Company for
$800,000, accepting a 5-year 6% note for the entire amount. Brown’s
incremental borrowing rate was 14%. The annual payment of
principal and interest on the note was to be $189,930. The aircraft
could have been sold at an established cash price of $651,460. The