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BB7. LO 12.2McMasters Inc, specializes in BBQ accessories. In order for pand its business, they take out a long-term loạn in the amount of $800,000. Assume that any ins are created on January 1. The terms of the loan include a periodic payment plan, where terest payments are accumulated each vear but are only computed against the outstanding interest Kicipal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. etermine the outstanding principal balance on December 31 of the first year that is computed for interest. Compute the interest accrued on December 31 of the first year.

BB7. LO 12.2McMasters Inc, specializes in BBQ accessories. In order for pand its business, they take out a long-term loạn in the amount of $800,000. Assume that any ins are created on January 1. The terms of the loan include a periodic payment plan, where terest payments are accumulated each vear but are only computed against the outstanding interest Kicipal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. etermine the outstanding principal balance on December 31 of the first year that is computed for interest. Compute the interest accrued on December 31 of the first year.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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EB7 and PA5

payment into a short-term note, with an annua Show the entries for the initial purchase, the partial payment, and the conversion. EB7. LO 12.2McMasters Inc, specializes in BBQ accessories. In order for the company to pand its business, they take out a long-term loan in the amount of $800,000. Assume that any ins are created on January 1. The terms of the loan include a periodic payment plan, where terest payments are accumulated each vear but are only computed against the outstanding Pricipal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is htdered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. petermine the outstanding principal balance on December 31 of the first year that is computed for interest. Compute the interest accrued on December 31 of the first year. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year. PA5. LO 13.3Volunteer Inc, issued bonds with a $500,000 face value, 10% interest rate, and a 4- year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2018: entry to record issuing the bonds June 30, 2019: entry to record payment of interest to bondholders June 30, 2019: entry to record amortization of premium June 30, 2020: entry to record payment of interest to bondholders June 30, 2020: entry to record amortization of premium PB5. LO 13.3Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2018: entry to record issuing the bonds June 30, 2019: entry to record payment of interest to bondholders June 30, 2019: entry to record amortization of discount
Transcribed Image Text:payment into a short-term note, with an annua Show the entries for the initial purchase, the partial payment, and the conversion. EB7. LO 12.2McMasters Inc, specializes in BBQ accessories. In order for the company to pand its business, they take out a long-term loan in the amount of $800,000. Assume that any ins are created on January 1. The terms of the loan include a periodic payment plan, where terest payments are accumulated each vear but are only computed against the outstanding Pricipal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is htdered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. petermine the outstanding principal balance on December 31 of the first year that is computed for interest. Compute the interest accrued on December 31 of the first year. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year. PA5. LO 13.3Volunteer Inc, issued bonds with a $500,000 face value, 10% interest rate, and a 4- year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2018: entry to record issuing the bonds June 30, 2019: entry to record payment of interest to bondholders June 30, 2019: entry to record amortization of premium June 30, 2020: entry to record payment of interest to bondholders June 30, 2020: entry to record amortization of premium PB5. LO 13.3Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2018: entry to record issuing the bonds June 30, 2019: entry to record payment of interest to bondholders June 30, 2019: entry to record amortization of discount
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