Universal Travel, Inc. borrowed $500,000 on November 1, 2021, and signed a twelve-month note bearing interest at 6%.

Universal Travel, Inc. borrowed $500,000 on November 1, 2021, and signed a twelve-month note bearing interest at 6%. Principal and interest are payable in full at maturity on October 31, 2022. In connection with this note, Universal Travel, Inc. should record interest expense in 2022 in the amount of:

A) $8,000.

B) $30,000.

C) $5,000.

D) $25,000.

Answer: D

Large, highly-rated firms sometimes sell commercial paper:

A) To borrow funds at a lower rate than through a bank.

B) To borrow funds when they cannot obtain a loan from a bank.

C) Because they can't borrow anywhere else.

D) To improve their credit rating.

Answer: A

An informal agreement that allows a company to borrow up to a prearranged limit without having to follow formal loan procedures and prepare paperwork is known as:

A) A line of credit.

B) Commercial Paper.

C) A debt covenant.

D) Working capital.

Answer: A

The Pita Pit borrowed $100,000 on November 1, 2021, and signed a six-month note bearing interest at 12%. Principal and interest are payable

The Pita Pit borrowed $100,000 on November 1, 2021, and signed a six-month note bearing interest at 12%. Principal and interest are payable in full at maturity on May 1, 2022. In connection with this note, The Pita Pit should report interest expense at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)

A) $0.

B) $1,000.

C) $2,000.

D) $6,000.

Answer: C

The Pita Pit borrowed $100,000 on November 1, 2021, and signed a six-month note bearing interest at 12%. Principal and interest are payable in full at maturity on May 1, 2022. In connection with this note, The Pita Pit should report interest expense in 2022 for the amount of:

A) $0.

B) $4,000.

C) $2,000.

D) $6,000.

Answer: B

Universal Travel, Inc. borrowed $500,000 on November 1, 2021, and signed a twelve-month note bearing interest at 6%. Principal and interest are payable in full at maturity on October 31, 2022. In connection with this note, Universal Travel, Inc. should report interest payable at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)

A) $8,000.

B) $30,000.

C) $5,000.

D) $25,000.

Answer: C