Cypress Oil Company's December 31, 2024, balance sheet listed $905,000 of notes receivable and $22,400 of interest receivableincluded in current assets. The following notes make up the notes receivable balance:Note 1 Dated 8/31/2024, principal of $450,000 and interest at 8% due on 2/28/2025.Note 2 Dated 6/30/2024, principal of $260,000 and interest due 3/31/2025.Note 3 $200,000 face value noninterest-bearing note dated 9/30/2024, due 3/31/2025. Note was issued in exchange for merchandise.The company records adjusting entries only at year-end. There were no other notes receivable outstanding during 2024.Required:1. Determine the rate used to discount the noninterest-bearing note.2. Determine the explicit interest rate on Note 2.3. What is the amount of interest revenue that appears in the company's 2024 income statement related to these notes?Answer is complete but not entirely correct.1. Discount rate10%2. Interest rate80%3. Interest revenue$53,696

Notes receivable is a balance sheet item shown on the asset side. Notes receivable is a promissory…

1. Determine the rate used to discount the noninterest-bearing note. 2. Determine the explicit interest rate on Note 2. 3. What is the amount of interest revenue that appears in the company's 2024 income statement related to these notes?

1. Determine the rate used to discount the noninterest-bearing note. 2. Determine the explicit interest rate on Note 2. 3. What is the amount of interest revenue that appears in the company's 2024 income statement related to these notes?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: During 2021, NIKOLA Company engaged in the following transactions: Sales to Jokic Company, a…

A: RELATED PARTY A related-party transaction is an agreement or arrangement between two parties who…

Q: Required information [The following information applies to the questions displayed below.] Cash…

A: The accounting equation states that assets are equal to the sum of the liabilities and equity. The…

Q: You have been assigned to audit the financial statements of TRUE CORPORATION, a real estate…

A: It is an agreement between two parties of a transaction, in which one party lends money from other…

Q: What is the interest income for 2022? Based on preceding data, what is the carrying value of the…

A: On sale of equipment with deferred payment the fair value of consideration recognized on the date of…

Q: A. Abu Dhabi Development Company had the following transactions involving notes payable. Nov. 1,…

A: Notes payable is a financial instrument which is a written promise to pay a certain sum of money…

Q: - Accounting On August 1, 2

A: To calculate the effective interest rate (APR) on the loan,Where:Interest Expense is the difference…

Q: The following unadjusted accounts are taken from the records of Brown Corp. at December 31, 2019:…

A: Adjusting Entry – Adjusting Entries are the entries that make the accrual principle work for the…

Q: In accounting for interest-bearing notes receivable, O the stated rate and effective rate are always…

A: The value of promissory notes that a company is owed and ought to be paid for is recorded as notes…

Q: . Journalize all entries for Symphony Bank related to the note for 2018 and 2019.

Q: a. Within the short-term obligations of Lance Company, as of December 31, 2011, the date on which…

A: Current liabilities are those charges that are generally paid within a one-year time span and it…

Q: What is the current CD (certificate of deposit rate) from your financial institution (bank) for a CD…

A: These rates are subject to change based on market conditions and the policies of our institution.…

Q: On 1 May 20X9, All-Man Imports Ltd. (AML) obtained a five-year loan from a major New York bank. The…

A: Exchange rate is a rate which is used to determine the currency value of a country in different…

Q: On December 31, 2022, the lender on a $5,400, 120-day, 12% note dated November 5, 2022, will…

A: The interest receivable is the amount of revenue which is earned but not received yet. It is…

Q: 1. Record the receipt of a note on February 28, 2018 for a $70,000 loan to an employee. 2. Record…

A: Journal entry: It is a systematic record of a financial transaction of an organization recorded in…

Q: Or Houston, m Teponed uhe foiOWing linanIcial statements for 2016 Requirement Reference Reference…

A: The balance sheet of two years helps to know about the transactions taken place during the current…

Q: Mango Co. issued a 6%, interest-bearing note payable on October 1, 2023. The note matures on April…

A: The objective of the question is to determine the adjusting entry for the interest-bearing note…

Q: Requirements 1. Journalize the following transactions of Laporte Communications, Inc.: 2. At…

Q: Note receivable from sale of division Note receivable from officer 1. $1,500,000 Transactions during…

A: Solution: 1. The long term receivables section of waterway's balance sheet:…

Q: to record the receipt What should have been the E of note from Company B on October 1, 2020?

A: Note receivable: It is a written promise. The promise is for receiving specific amount of cash on…

Q: XYZ Corporation wants to issue ten-year $1,000 bonds 6% stated rate paying interest annually. Market…

A: Bonds represents the obligation of the company arose by borrowing financial help from the public by…

Q: Abardeen Corporation borrowed $136,000 from the bank on October 1, 2018. The note had an 7 percent…

A: Abardeen Corporation borrowed $136,000 from the bank on October 1, 2018. The note had an 7 percent…

Q: How much is the amount attributable to the principal portion of the note on the payment made on…

A: Principal portion means the amount of instalment that is not attributable to the interest portion.

Q: How to calculate the due date, interest and maturity value on both a Traditional Note and Discounted…

A: Due date for a Traditional Note and discounted note is calculated as below:

Q: $45,300, 7-month, 6% note dated October 31, 2021 with Q Tile LLC. All of the note's interest is due…

A: Notes receivable are claims for which formal instruments of credit, such as a promissory note, are…

Q: Lanson Corporation Co.'s trial balance included the following account balances at December 31, 2021:…

A: Current liabilities section include the payables due within 12 months period. The the liabilities…

Q: months after the given mat

A: Given as,

Q: What journal entry should be made to reflect the issuance of a $3,000 note to a creditor who has…

A: The issue is a journal entry that records the issuing of a $3,000 note to a customer. creditor who…

Q: Suppose the face amount of the notevwas adjusted to include nonbearing interest note andc12% is yhr…

A: To DateParticularsDebit($)Credit($)Oct. 1, 2021Cash A/c Dr.26880000Discount on notes payable A/c…

Q: Interest expense should be calculated based on interest rates and debt balances and by using a trend…

A: Interest expense is the amount paid periodically on the borrowed amount. The borrowed amount can be…

Q: E10.1 (LO 1), AP C.S. Lewis Company had the following transactions involving notes payable. July 1,…

A: Note payable: Note payable also called promissory note. It is a legal instrument in which one party…

Q: 34. The current portion of long-term notes receivable as at December 31, 2021 is

A: Notes receivable is a promissory note where one party promises to another party to pay a certain sum…

Q: On September 1, 2019, a company borrowed cash and signed a 1-year,interest-bearing note on which…

A: the current liabilities are the liabilities that are to be paid off within one year.

Q: Suppose Alladin Travel, Inc., holds a note receivable as an investment. At the endof June, $100 of…

A: Given information is: Suppose Alladin Travel, Inc., holds a note receivable as an investment. At…

Q: Maker Maple Wyman. Nahn. Date of Note 11/21 12/13 12/24 Principal $20,000 14,000 21,000 Interest…

A: Accrued interest on notes receivable is the amount of interest that has been earned by not yet paid.…

Q: Interest income recognized for a noninterest bearing note is: Group of answer choices Based on…

A: Note means an instrument issued by company acknowledging the debt due from company to bond holder.…

Q: Compute for the total interest income to be recognized in 2020 in relation to the four note…

A: Promissory Note:- It is a written document where the writer has to pay the agreed amount to the…

Q: On December 31, 2021, AAA Company sold for P3,000,000 an old equipment having an original cost of…

A: This question deals with the calculation of interest income and carrying value of notes receivable.…

Q: The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar…

A: Journal entries are prepared to record the financial and non financial transactions of the business…

Q: Current Attempt in Progress On January 1, 2022, the ledger of Splish Brothers Inc. contained these…

A: Current Liabilities: These are all short-term financial obligations of an enterprise which are to…

Q: What journal entry should be made to reflect the issuance of a $30,000 note to a creditor who has…

A: A magazine access is used to report a business transaction in a organization's accounting records. A…

Q: Husemann Co.'s assets include notes receivable from customers. During fiscal 2019, the amount of…

A: Notes Receivables: If the notes receivable have a life of less than a year, they are generally shown…

Q: 1) What is the difference between Interest Receivables and Account Receivables and Interest…

Q: The books of Blue moon bank as on 31/12/2019 showed the following information: Rebate on bills…

A: Rebate on bills discounted means discount received in advance. It is portion of discount which…

Q: Under the effective interest method of interest bearing note in lump-sum payment, the interest to be…

A: The bonds are issued at premium or discount depending on the market interest rate of bonds. If…

Q: the property taxes were levied in the amount of $905,000. All of the taxes are expected to be…

A: Journalizing is the process of recording financial transactions in a journal, where each entry…

Q: Accounting for notes receivable and accruing interest Carley Realty loaned money and received the…

A: 1. The maturity date of note 1, note 2 and note 3 are 31 March, 31 March and 18 December. The…

Q: RM Company disclosed the following information on December 31, 2021: Accrued rent expense Share…

A: Current Liabilities: When referring to current liabilities, we mean obligations that must be paid…

Question

Cypress Oil Company's December 31, 2024, balance sheet listed $905,000 of notes receivable and $22,400 of interest receivable
included in current assets. The following notes make up the notes receivable balance:
Note 1 Dated 8/31/2024, principal of $450,000 and interest at 8% due on 2/28/2025.
Note 2 Dated 6/30/2024, principal of $260,000 and interest due 3/31/2025.
Note 3 $200,000 face value noninterest-bearing note dated 9/30/2024, due 3/31/2025. Note was issued in exchange for merchandise.
The company records adjusting entries only at year-end. There were no other notes receivable outstanding during 2024.
Required:
1. Determine the rate used to discount the noninterest-bearing note.
2. Determine the explicit interest rate on Note 2.
3. What is the amount of interest revenue that appears in the company's 2024 income statement related to these notes?
Answer is complete but not entirely correct.
1. Discount rate
10
%
2. Interest rate
80
%
3. Interest revenue
$
53,696

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Explain notes receivable

VIEW

Step 2: Calculate discount rate

VIEW

Step 3: Calculate Interest rate

VIEW

Step 4: Calculate interest revenue

VIEW

Solution

VIEW

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The following section is taken from Crane's balance sheet at December 31, 2021. Current liabilities Interest payable Long-term liabilities Bonds payable (8%, due January 1, 2025) (a) Interest is payable annually on January 1. The bonds are callable on any annual interest date. (b) Journalize the payment of the bond interest on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Jan. 1, 2022 eTextbook and Media List of Accounts Save for Later $33,000 412,500 Account Titles and Explanation Date Account Titles and Explanation Jan. 1, 2022 Debit Attempts: 0 of 5 used Assume that on January 1, 2022, after paying interest, Crane calls bonds having a face value of $165,000. The call price is 101. Record the redemption of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Debit Credit Submit Answer Credit
A. Amount of interest charge for each note B. Amount boweower would receive C. Amount payer would receive at maturity D. Effective rate
Required information [The following information applies to the questions displayed below.] On August 1, 2022, Colombo Company's treasurer signed a note promising to pay $122,400 on December 31, 2022. The proceeds of the note were $116,400. c. 1. Record the journal entry to show the effects of signing the note and the receipt of the cash proceeds on August 1, 2022. 2. Record the journal entry to show the effects of recording interest expense for the month of September. 3. Record the journal entry to show the effects of repaying the note on December 31, 2022. Complete this question by entering your answers in the tabs below. Required C1 Required C2 Required C3 Record the journal entry to show the effects of signing the note and the receipt of the cash proceeds on August 1, 2022. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1
On October 18, Blue Ridge Corporation accepted a $300,000 non-interest-bearing note from Long Corporation. What is the maturity value of the note? Use ordinary interest. Maturity Value
On August 1, 2022, Colombo Company's treasurer signed a note promising to pay $121,500 on December 31, 2022. The proceeds of the note were $116,100. Use the horizontal model to show the effects of signing the note and the receipt of the cash proceeds on August 1, 2022. Indicate the financial statement effect. Use the horizontal model to show the effects of recording interest expense for the month of September. Indicate the financial statement effect. Use the horizontal model to show the effects of repaying the note on December 31, 2022. Indicate the financial statement effect.
*please se attached photo How much is the estimated amount to be paid as settlement of the notes payable and what is the estimated recovery percentage?
What is the principal amount of a note receivable plus the interest due called? promissory value maturity value expected value face value
On August 1, 2022, Colombo Company’s treasurer signed a note promising to pay $122,700 on December 31, 2022. The proceeds of the note were $116,100. Use the horizontal model to show the effects of recording interest expense for the month of September. Indicate the financial statement effect. What is the discount on notes payable and what is the interest expense?
1. On December 31, 2020, what is the carrying value of the note received from Company B? 2. What should be the TOTAL carrying value of the notes on December 31, 2020?
Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $26,500,000 of five-year, 12% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 13%, resulting in Chin receiving cash of $25,547,585. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) If an amount box does not require an entry, leave it blank. 1. 2. 3. 300 000 000 000 000 b. Determine the amount of the bond interest expense for the first year.
On August 1, 2022, Colombo Company's treasurer signed a note promising to pay $122,100 on December 31, 2022. The proceeds of the note were $115,800. Use the horizontal model to show the effects of signing the note and the receipt of the cash proceeds on August 1, 2022. Indicate the financial statement effect. Use the horizontal model to show the effects of recording interest expense for the month of September. Indicate the financial statement effect. Use the horizontal model to show the effects of repaying the note on December 31, 2022. Indicate the financial statement effect.
1.) How much is adjusted Interest Expense on December 31, 2021? - 37,500 2.) How much is adjusted Notes Receivable on December 31, 2021?