Use the Following to Answer Questions

question 67

Short Answer

Use the following to answer questions
The Baltimore Company issued a $9,000 face value discount note to Bank of the Chesapeake on March 1,2016.The note carried a 5% discount rate and a one-year term to maturity.
-After accruing all interest expense due as of April 1,2016,Baltimore Company made the cash payment for the full amount due (i.e. ,principal and interest)to Bank of the Chesapeake.Select the answer that shows how the cash payment will affect Baltimore's financial statements.

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Definitions:

Variable Costs

Costs that change directly in proportion to changes in the volume of production or activity level, such as raw materials, labor costs directly tied to production, and utility costs for manufacturing facilities.

Fixed Costs

Expenses that do not change in total despite changes in the volume of goods or services produced or sold.

Sales

The total revenue earned from selling goods or services over a specific period.

Break-Even

The point where total expenses match total income, leading to neither a profit nor a loss.