Durango, Inc. borrowed $20,000 on October 1, 2020. Durango will not make any payments on this loan until October 1, 2023, and at that time Durango will owe $26,000. What will be the amounts shown on Durango's annual financial statements at December 31, 2022? O Interest expense of $2,000 and interest payable of $4,500 Interest expense of $4,500 and interest payable of $4,500 Interest expense of $4,500 and interest payable of $1,500 Interest expense of $2,000 and interest payable of $1,500 O None of the above

Durango, Inc. borrowed $20,000 on October 1, 2020. Durango will not make any payments on this loan until October 1, 2023, and at that time Durango will owe $26,000. What will be the amounts shown on Durango's annual financial statements at December 31, 2022? O Interest expense of $2,000 and interest payable of $4,500 Interest expense of $4,500 and interest payable of $4,500 Interest expense of $4,500 and interest payable of $1,500 Interest expense of $2,000 and interest payable of $1,500 O None of the above

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 28E: On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First...

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On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
What is the carrying amount of the loan receivable on December 31, 2022? Beach Bank loaned Boracay Company P7,500,000 on January 1, 2019. The terms of the loan were payment in full on January 1, 2023 plus annual interest payment at 11%. The interest payment was made as scheduled on January 1, 2020. However, due to financial setbacks, Boracay Company was unable to make the 2021 interest payment. Beach Company considered the loan impaired and projected the cash flows from the loan on December 31, 2021. The bank accrued the interest on December 31, 2020, but did not continue to accrue interest for 2021 due to the impairment of the loan. The projected cash flows are: Date of cash flow Amount projected on December 31, 2021 December 31, 2022 500,000 1,000,000 December 31, 2023 December 31, 2024 December 31, 2025 2,000,000 4,000,000 The PV of 1 at 11% is 0.90 for one period, 0.81 for two periods, 0.73 for three periods, and 0.66 for four periods. a. 7,000,000 b. 5,449,600 c. 4,860,000 d.…
On December 1, 2021, your company borrowed $48,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2022, $6,400; 2023, $9,600; 2024, $12,800; and 2025, $19,200. Show how this loan will be reported in the December 31, 2022 and 2021 balance sheets, assuming principal payments will be made when required. Balance Sheet (Partial) As of December 31 2022 2021 Total Liabilities
Fiat borrowed $80,000 on October 1, 2019. Fiat will not make any payments until October 1, 2021, at that time, Fiat will pay 84,000. Which of the following correctly states the annual financial statement as of December 31, 2020?
On December 1, 2021, your company borrowed $15,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2022, $2,000; 2023, $3,000; 2024, $4,000; and 2025, $6,000. Show how this loan will be reported in the December 31, 2022 and 2021, balance sheets, assuming principal payments will be made when required. Total Liabilities Balance Sheet (Partial) $ As of December 31 2022 2021 0 0 4
What is the interest income for 2022? Beach Bank loaned Boracay Company P7,500,000 on January 1, 2019. The terms of the loan were payment in full on January 1, 2023 plus annual interest payment at 11%. The interest payment was made as scheduled on January 1, 2020. However, due to financial setbacks, Boracay Company was unable to make the 2021 interest payment. Beach Company considered the loan impaired and projected the cash flows from the loan on December 31, 2021. The bank accrued the interest on December 31, 2020, but did not continue to accrue interest for 2021 due to the impairment of the loan. The projected cash flows are: Date of cash flow Amount projected on December 31, 2021 December 31, 2022 December 31, 2023 500,000 1,000,000 December 31, 2024 2,000,000 December 31, 2025 4,000,000 The PV of 1 at 11% is 0.90 for one period, 0.81 for two periods, 0.73 for three periods, and 0.66 for four periods. a. 589,600 b. 534,600 O c. 825,000 O d. 599,456
The Pita Pit borrowed $191,000 on November 1, 2021, and signed a six-month note bearing interest at 12%. Principal and interest are payable in full at maturity on May 1, 2022.In connection with this note, The Pita Pit should report interest expense at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)
Able Inc. borrowed $60,000 on October 1, 2019 and agreed to pay back $75,000 on October 1, 2022. How much did Able show in interest payable and interest expense in its annual financial statements at December 31, 2021? O Interest expense $5,000; interest payable $11,250 Interest expense $5,000; interest payable $3,750 O Interest expense $5,000; interest payable $5,000 Both interest expense and interest payable $11,250 O Interest expense is $11,250 and interest payable is $5,00O
Sally Corp. borrowed $360,000 from County Bank on January 1, 2020 signing a 15 year note payable. The loan has an interest rate of 4% and a fixed annual payment of $32,379. Annual payments begin January 1, 2021. What amount of the payment made on January 1, 2022 will be interest expense?
B. MATATAG Bank loaned P5,000,000 to a borrower on January 1, 2019. The term of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2020. The borrower made the required payments during 2020 and 2021. However, during 2021 the borrower began to experience financial difficulties, requiring the bank to reassess the collectability of the loan. On December 31, 2021, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2021. Present value of 1 at 8% 0.926 For one period For two periods For three periods 0.857 0.794 1. What is the impairment loss for 2021? а. 423,000 b. 217,000 c. 222,000 d. 0 2. What is the interest income for 2022? a. 126,160 b. 142,640 c. 240,000 d. 0 3. What is the carrying amount of the loan receivable on December 31,…