On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 facevalue, four-year term note that had an 6 percent annual interest rate. The note is to berepaid by making annual cash payments of $12,121 that include both interest and principalon December 31 of each year. Brown used the proceeds from the loan to purchase land thatgenerated rental revenues of $22,260 cash per year.Prepare an income statement, a balance sheet, and a statement of cash flows for each ofthe four years.

Financial statements are essential documents that give a thorough summary of a company's financial…

Answered: On January 1, 2018, Brown Co. borrowed…

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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Martinez Co. borrowed $62,310 on March 1 of the current year by signing a 60-day, 8%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to record the payment should include a a.debit to Interest Payable for $831. b.debit to Interest Expense for $831. c.credit to Cash for $62,310. d.credit to Cash for $67,295.
Martinez Co. borrowed $54,000 on March 1 of the current year by signing a 60-day, 7%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to journalize the payment should include a a. debit to Interest Payable for $630 b. debit to Interest Expense for $630 c. credit to Cash for $54,000 d. credit to Cash for $57,780
Dan Dayle started a business by issuing an $98,000 face value note to First State Bank on January 1, Year 1. The note had a 8 percent annual rate of interest and a five-year term. Payments of $24,545 are to be made each December 31 for five years. Required: a. What portion of the December 31, Year 1, payment is applied to interest expense and principal? b. What is the principal balance on January 1, Year 2? c. What portion of the December 31, Year 2, payment is applied to interest expense and principal? Note: Round your answers to the nearest dollar amount. a. Interest expense a. Principal b. Principal balance c. Interest expense c. Principal
On January 1, 2018, King Inc. borrowed $190,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $47,569 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.) If an amount box does not require an entry, leave it blank. Jan. 1 Cash ✔ Note Payable Dec. 31 Note Payable Interest Expense Cash ✓ ✔ ✓
On the first day of the fiscal year, Shiller Company borrowed $33,000 by giving a seven-year, 8% installment note to Soros Bank. The note requires annual payments of $6,404, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $2,640 and principal repayment of $3,764. Journalize the entries to record the following: a1. Issued the installment note for cash on the first day of the fiscal year. If an amount box does not require an entry, leave it blank. Cash fill in the blank 9d174cf85026fb7_2 fill in the blank 9d174cf85026fb7_3 Notes Payable fill in the blank 9d174cf85026fb7_5 fill in the blank 9d174cf85026fb7_6 a2. Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank. Interest Expense fill in the blank 6e673f01702302e_2 fill in the blank 6e673f01702302e_3 Notes Payable fill in the blank 6e673f01702302e_5 fill in the blank…
On November 1, 2021, Quantum Technology, a geothermal energy supplier, borrowed $4 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 9% promissory note. Interest was payable at maturity. Quantum's fiscal period is the calendar year. Required: 1. Prepare the journal entry for the issuance of the note by Quantum Technology. 2. & 3. Prepare the appropriate adjusting entry for the note by Quantum on December 31, 2021 and journal entry for the payment of the note at maturity. (For all requirements, If no entry is required for a transaction/event, select "No journal entry required" In the first account fleld. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 1 2 Record the issuance of the note by Quantum Technology. Date November 01, 2021 3 Note: Enter debits before credits. Record entry General Journal Clear entry Debit Credit View general…
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On Jan 1st, 2022, Saturn borrows $2,000,000 from Orange Bank and pledges $2,500,000 of its accounts receivables as collateral. Saturn pays a 1% finance fee for the borrowing and the interest is 8% on the note. Record the journal entry on Jan 1st, 2022.
On September 1, 2015, Newtown borrowed $250,000 from First National Bank, and signed a 9% note payable due in one year. Interest on the note is due at maturity. Required: Please show calculations Part a. Prepare the journal entry to record the borrowing transaction. Part b. Prepare the required adjusting entry on December 31, 2015. Part c. Prepare the journal entry to record the payment of the interest on September 1, 2016. Part d. Prepare the journal entry to record the payment of the note on September 1, 2016.
On January 1, 2018, Nantucket Ferry borrowed $14,000,000 cash from BankOne and issued a four-year,$14,000,000, 6% note. Interest was payable annually on December 31. Prepare the journal entries for both firmsto record interest at December 31, 2018.
Singer Company has a line of credit with United Bank. Singer can borrow up to $400,000 at any time over the course of the Year 1 calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during the first three months of Year 1. Singer agreed to pay interest at an annual rate equal to 2 percent above the bank’s prime rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. For example, Singer pays 6.5 percent (4.5 percent + 2 percent) annual interest on $140,000 for the month of February. Month Amount Borrowed or (Repaid) Prime Rate for the Month January $80,000 4.0% February 60,000 4.5 March (20,000) 4.0 Required Provide all journal entries pertaining to Singer’s line of credit for the first three months of Year 1.
On the first day of the fiscal year, Shiller Company borrowed $26,000 by giving a three-year, 12% installment note to Soros Bank. The note requires annual payments of $10,952, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $3,120 and principal repayment of $7,832. Journalize the entries to record the following: a1. Issued the installment note for cash on the first day of the fiscal year. If an amount box does not require an entry, leave it blank. a2. Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank. b. How would the notes payable be reported on the balance sheet at the end of the fiscal year?

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