Question : 38.Grove begins his loan transactions with Commerce Bank by borrowing : 1254232

38.Grove begins his loan transactions with Commerce Bank by borrowing $1,000 on January 1, 2013. Which of the following answers shows the effect of this event on the financial statements?  

A. Option A

B. Option B

C. Option C

D. Option D

39.Grove records the first year’s interest payment on December 31, 2013. Commerce’s prime rate is 4% for 2013. Which of the following answers shows the effect of this event on the financial statements?  

A. Option A

B. Option B

C. Option C

D. Option D

40.Norris Company has a line of credit with the Everett State Bank. Norris agreed to pay interest at an annual rate equal to 2% above the bank’s prime rate. Funds are borrowed or repaid on the first day of each month and interest is paid in cash on the last day of each month. Activity to date is given as follows: The amount of interest paid at the end of March would be:  

A. $75.

B. $125.

C. $133.

D. $150.

41.Ferguson Company obtained an $80,000 line of credit from the Metropolitan Bank on January 1, 2013. The company agreed to accept a variable interest rate that was set at 2% above the bank’s prime lending rate. The bank’s prime rate of interest and the amounts borrowed or repaid during the first three months of 2013 are shown in the following table. Assume that Ferguson borrows or repays on the first day of each month. Borrowing is shown as a positive amount and repayments are shown as negative amounts indicated by parentheses. Based on this information alone, the amount of interest expense recognized for the month of March would be:  

A. $116.

B. $131.

C. $146.

D. $204.

42.Fiorentino Corporation recorded the following in its general journal on 1/1/13: Which of the following answers correctly describes the transaction on 1/1/13?  

A. Fiorentino issued bonds at 98.

B. Fiorentino issued bonds at 102.

C. Fiorentino issued bonds at a $2,000 premium.

D. Fiorentino signed a note payable for $98,000.

43.What is the name used for the type of secured bond that requires a pledge of a designated piece of real property in case of default?  

A. Debenture Bond.

B. Indenture Bond.

C. Mortgage Bond.

D. Registered Bond.

44.Which of the following describes the characteristics of a convertible bond?  

A. Bonds mature at specified intervals throughout the life of the total issuance.

B. Bonds may be exchanged for stock at the discretion of the issuer.

C. Bonds mature on a specified date in the future.

D. Bonds may be exchanged for stock at the discretion of the bondholder.

45.Callable bonds may be:  

A. called for early retirement at the option of the bondholder.

B. called for early retirement at the option of the issuer.

C. converted to common stock at the option of the bondholder.

D. converted to common stock at the option of the issuer.

46.Bonds payable are usually classified on the balance sheet as:  

A. long-term liabilities.

B. current liabilities.

C. investments and funds.

D. other assets.

47.Unsecured bonds are called:  

A. debenture bonds.

B. coupon bonds.

C. discount bonds.

D. par value bonds.