EX 10-6 Fixed asset purchase with note **Chapter 10: Liabilities, Current, Installment Notes, and Contingencies****EX 10-3 Evaluating Alternative Notes**Objective: Determine the most favorable loan option for a borrower.- A borrower has two alternatives for a loan: 1. Issue a $150,000, 45-day, 4% note. 2. Issue a $150,000, 45-day note that the creditor discounts at 4%.- Tasks: a. Calculate the amount of the interest expense for each option. b. Determine the proceeds received by the borrower in each situation. c. Analyze and explain which alternative is more favorable to the borrower.**EX 10-4 Entries for Notes Payable**Objective: Journalize entries related to notes payable.- Scenario: A business issued a 120-day, 5% note for $60,000 to a creditor on account.- Tasks: Record (a) the issuance of the note, and (b) the payment of the note at maturity, including interest.**EX 10-5 Entries for Discounted Note Payable**Objective: Record entries for discounted notes.- Scenario: A business issued a 60-day note for $60,000 to a bank, discounted at 8%.- Tasks: Journalize the entries to record (a) the issuance of the note, and (b) the payment of the note at maturity.**EX 10-6 Fixed Asset Purchases with Note**Objective: Record transactions involving fixed asset purchases with installment notes.- Scenario: On June 30, Collins Management Company purchased land for $400,000 and a building for $560,000, paying $360,000 in cash and issuing a 5% note for the balance, secured by a mortgage.- Terms: 20 semiannual payments of $30,000 on the principal, plus accrued interest from the date of the preceding payment.- Tasks: Journalize the entries to record (a) the transaction on June 30, (b) the payment of the first installment on December 31, and (c) the payment of the second installment the following June 30.**EX 10-7 Current Portion of Long-Term Debt**Objective: Understand the reporting of long-term debt in financial statements.- Example: PepsiCo, Inc. (PEP) reported the following in its financial statement notes (in millions): - **December

Note payable is a kind of loan which is repayable after certain period of time with interest.

EX 10-6 Fixed asset purchases with note On June 30, Collins Management Company purchased land for $400,000 and a building for $560,000, paying $360,000 cash and issuing a 5% note for the balance, secured by'a mortgage on the property. The terms of the note provide for 20 semiannual payments of $30,000 on the prin- cipal plus the interest accrued from the date of the preceding payment. Journalize the entry to record (a) the transaction on June 30, (b) the payment of the first installment on December 31, and (c) the payment of the second installment the following June 30. Obj. 1

EX 10-6 Fixed asset purchases with note On June 30, Collins Management Company purchased land for $400,000 and a building for $560,000, paying $360,000 cash and issuing a 5% note for the balance, secured by'a mortgage on the property. The terms of the note provide for 20 semiannual payments of $30,000 on the prin- cipal plus the interest accrued from the date of the preceding payment. Journalize the entry to record (a) the transaction on June 30, (b) the payment of the first installment on December 31, and (c) the payment of the second installment the following June 30. Obj. 1

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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