Cypress Oil Company's December 31, 2021, balance sheet listed $735,000 of notes receivable and $21,600 of interest recelvableincluded in current assets. The following notes make up the notes receivable balance:Note 1 Dated 8/31/2021, principal of $340,000 and interest at 12% due on 2/28/2022.Note 2 Dated 6/30/2021, principal of $200,000 and interest due 3/31/2022.Note 3 $20e,eee face value noninterest-bearing note dated 9/30/2021, due 3/31/2022. Note was issued in exchange for merchandise.The company records adjusting entries only at year-end. There were no other notes receivable outstanding during 2021.Required:1. Determine the rate used to discount the noninterest-bearing note.2. Determine the explicit interest rate on Note 2. (Round your intermediate calculations to the nearest whole dollar amount.)3. What is the amount of interest revenue that appears in the company's 2021 income statement related to these notes?1.Discount rate2.Interest rate3.Interest revenue

The discount rate is an interest rate charged by the central bank while lending money to commercial…

Answered: Cypress Oil Company's December 31,…

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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31. Vigan Corporation included the following in its notes receivable as at December 31, 2021: Note receivable from sale of land P 880,000 1,200,000 Note receivable from consultation Note receivable from sale of equipment 1,600,000 In connection with your audit, you were able to gather the following transactions during 2021 and other information pertaining to the company's notes receivable: a. On January 1, 2021, Vigan Corporation sold a tract of land. The land was purchased 10 years ago was carried on Vigan's Corporation's books at a value of P 500,000. Vigan received a noninterest bearing note for P 880,000. The note is due on December 31, 2022. There is no readily available market value for the land but the current market rate of interest for comparable notes is 10%. b. On January 1, 2021, Vigan Corporation finished consultation services and accepted in exchange of a promissory note with a face value of P 1,200,000, a due date of December 31, 2023 and a stated rate of 5% with…
Cypress Oil Company's December 31, 2021, balance sheet listed $727,000 of notes receivable and $21,300 of interest receivable included in current assets. The following notes make up the notes receivable balance: Note 1 Dated 8/31/2021, principal of $390,000 and interest at 9% due on 2/28/2022. Note 2 Dated 6/30/2021, principal of $240,000 and interest due 3/31/2022. Note 3 $100,000 face value noninterest-bearing note dated 9/30/2021, due 3/31/2022. Note was issued in exchange for merchandise. The company records adjusting entries only at year-end. There were no other notes receivable outstanding during 2021. Required: 1. Determine the rate used to discount the noninterest-bearing note. 2. Determine the explicit interest rate on Note 2. (Round your intermediate calculations to the nearest whole dollar amount.) 3. What is the amount of interest revenue that appears in the company's 2021 income statement related to these notes? 1. 2. 3. Discount rate Interest rate Interest revenue Answer…
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C.S. Crane Company had these transactions involving notes payable. July 1, 2022 Nov. 1, 2022 Dec. 31, 2022 Feb. 1, 2023 Apr. 1, 2023 Borrows $50,500 from First National Bank by signing a 9-month, 8% note. Borrows $62,600 from Lyon County State Bank by signing a 3-month, 6% note. Prepares adjusting entries. Pays principal and interest to Lyon County State Bank. Pays principal and interest to First National Bank.

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