Reference no: EM132460

Question:

The amortization of bond discount:

A) Increases the cash paid to bondholders for interest

B)  Results in bond interest expense being greater than the interest paid to bondholders

C) Results in bond interest expense being less than the interest paid to bondholders

D) Reduces the carrying value of bonds payable on the balance sheet

Hardcover, Inc. borrowed $8,000 for 3 months on a discount basis. The lender used an interest rate of 9% to determine the discount. The amount of cash Hardcover, inc. actually had available to utilize from this loan was:

A)           $7,280

B)            $7,820

C)            $8,000

D)           $8,180

Stamper Co. signed a $9,000, 6 month note. Interest was evaluated on a discount basis, and Stamper Co, paid $360 interest.

A)           4%

B)            8%

C)            8.33%

D)           8.70%

Softop, Inc. borrowed $3,000 for 4 months at an APR of 8%. The amount of interest paid on this loan was:

A)           $58.80

B)            $60.00

C)            $80.00

D)           $240.00