11. On December 31, 2016, Ravenwood Company made an annual payment on a long-term installment note payable. Show how this annual payment affected Ravenwood's financial statements.
12. On January 1, 2016, Flagler Corporation signed a contract with the City Bank for a line of credit that permitted Flagler to borrow up to $50,000. Indicate the effects of signing this contract.
13. On January 1, 2016, Flagler Corporation borrowed $20,000 on a line-of-credit from City Bank. Show the effects of this transaction on Flagler's financial statements.
14. On December 31, 2016, Flagler Corporation had a balance of $20,000 on a line-of-credit with City Bank. Flagler made a payment of $11,200, which included $10,000 on the principal and $1,200 interest. Show the effects of this transaction on Flagler's financial statements.
15. Discuss the tax advantage of long-term debt financing.
16. Why does interest expense decrease during the life of an installment note payable? How is the amount of interest expense computed?
17. Discuss the advantages of establishing a line of credit.
18. How are interest rates normally set for lines of credit?
19. Name some of the restrictive covenants often included in bond indentures.
20. Discuss the purpose of a sinking fund.