On January 1, Ajax Corp Accepted a One-Year Note for $50,000

question 68

Multiple Choice

On January 1, Ajax Corp accepted a one-year note for $50,000 at 5% from one of its customers. When the note matured on December 31, the customer was unable to pay, and the company recorded the dishonor. The amount of the debit in the dishonor entry would be:

• A)$47,500.
• B)$2,500.
• C)$50,000.
• D)$52,500.

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Definitions:

Annual Coupon Payments

The fixed interest payments made by a bond issuer to the bondholders at regular intervals over the life of the bond.

Positive Slope

In graph terms, a positive slope indicates that as one variable increases, the other variable also increases, demonstrating a direct relationship.

Economy

The system of production, distribution, and consumption of goods and services within a particular region or country.

Coupon Rate

A bond's annually paid interest rate, denoted as a percentage of its face value.