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1) On January 1, Pat Weaver, Inc. borrowed cash by issuing a $370,000, 5%, installment note to be paid in three equal payments at the end of each year beginning December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)What would be the amount of each installment?Prepare an amortization table for the installment note.Prepare the journal entry for the second installment payment.

2) On January 1, 2022, Bradley Recreational Products signed a long-term finance lease for an office building. The terms of the lease required Bradley to pay $19,000 annually, beginning December 31, 2022, and continuing each year for 12 years. On January 1, 2022, the present value of the lease payments is $129,460 discounted at the 10% interest rate implicit in the lease. In Bradleys December 31, 2022, balance sheet, the lease payable should be:

$209,000

$110,460

$129,460

$123,406

3) Zero-coupon bonds:

Offer a return in the form of a deep discount off the face value.

Result in zero interest expense for the issuer.

Are reported as shareholders' equity by the issuer.

Result in zero interest revenue for the investor.

4) Acme Auto Repair leased equipment from Cromley Motor Products. Cromley earns interest under such arrangements at a 7% annual rate. The lease term is six-months with monthly payments of $12,500 due at the end of each month. Acme elected the short-term lease option.What is the effect of the lease on Acmes earnings during the six-month term (ignore taxes)?

5) Interest expense:

The effective interest rate times the amount of the debt outstanding during the interest period.

The effective interest rate times the face amount of the debt.

The stated interest rate times the amount of the debt outstanding during the interest period.

The stated interest rate times the face amount of the debt.

6)On February 1, 2021, B. Corp. issued 8%, $2,000,000 bonds for $2,300,000. B. Corp. retired all of these bonds on January 1, 2022, at 106. Unamortized bond premium on that date was $212,000. How much gain or loss should B. Corp. recognize on this bond retirement?

$0 gain.

$184,000 gain.

$160,000 gain.

$92,000 gain.

7) Lasch Co. makes $3,400 payments every month for leasing office equipment. Lasch recorded a lease payment as follows:Lease payable 2,040Interest expense 1,360Cash 3,400Amortization expense 2,040Right-of-use asset 2,040Lasch must have a(n):

Finance lease.

Sales-type lease without selling profit.

Operating lease.

Leveraged lease.

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