1. On September 1, 2010, Donna Equipment signed a one-year, 10% interest-bearing note payable for $52,000. Assuming that Donna Equipment maintains its books on a calendar year basis, how much interest expense that should be reported in the 2011 income statement? (Do not round intermediate calculations.)
$1,733
$3,467
$5,200
$3,900


2. Short Company purchased land by paying $29,000 cash on the purchase date and agreeing to pay $29,000 for each of the next eight years beginning one-year from the purchase date. Short's incremental borrowing rate is 9%. At what amount would the land be reported at on the balance sheet? (Use Table 2) (Round "PV Factor" to 4 decimal places.)
$232,000
$116,433
$261,000
$189,509


3. Rudy Corporation is looking to purchase a building costing $460,000 by paying $80,000 cash on the purchase date, and agreeing to make annual payments for the next eight years; the first payment is due one year after the purchase date. Rudy's incremental borrowing rate is 8%. How much will each of the annual payments be? (Use Table 2) (Round "PV Factor" to 4 decimal places and final answer to nearest dollar amount.)
rev: 06-16-2011 
$80,047
$47,500
$56,126
$66,126


4. What is the correct entry for the sale of 2,900 shares of $25 par value preferred stock for $188,500 cash?
A Cash 188,500 
Preferred stock 188,500 
B Cash 72,500 
Preferred stock 72,500 
C Cash 188,500 
Gain on sale of preferred stock 116,000 
Preferred stock 72,500 
D Cash 188,500 
Preferred stock 72,500 
Capital in excess of par, preferred stock 116,000 
Option A
Option C
Option B
Option D

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