On July 1, 2021, ABC Co. borrowed P1,000,000 and issued a one-year note payable. The lender discounted the note at 12%. Prepare all the necessary journal entries under the following scenarios: a. The note is due on lump sum on June 30, 2022. The effect of discounting is immaterial. b. The note is due in equal quarterly installments starting September 20, 2021

Q: Cucina Corporation signed a new installment note on January 1, 2021, and deposited the proceeds of…

A: Step 1:Step 2:Step 3:Step 4:

Q: Samco signed a 9-year note payable on January 1, 2025, of $540,000. The note requires annual…

A: Detailed explanation:Face value of the note $ 540,000 ,  interest rate 6% , issued January 1, 2025…

Q: On November 12, 2021, Jones Corporation borrows money at James National Bank by issuing a $10,000, 3…

A: Effective annual interest rate = Interest / ( Proceeds x Time ) Given that: Discounted = 12% Basis…

Q: MCM Company issued a note receivable to a customer on September 1, 2020. The face value of the note…

A: Note receivable is considered as a negotiable instrument. It represents the claim amount due on the…

Q: On December 31, 2022, the lender on a $5,400, 120-day, 12% note dated November 5, 2022, will…

A: The interest receivable is the amount of revenue which is earned but not received yet.  It is…

Q: On January 1, 2021, Cullumber Corp. borrows $9,000 by signing a 3-year, 3% note payable. The note is…

A: Period Cash payment Interest expense at 3% Reduction of principal Principal balance Jan 1, 2021…

Q: Wildhorse Co. issued a five-year interest-bearing note payable for $324000 on January 1, 2019. Each…

A: Balance sheet is the financial statement which involves the total debt, liabilities, assets and…

Q: On October 1, 2023, Parton Industries borrowed $12 million cash to provide working capital. The loan…

A: The objective of the question is to calculate the interest expense for the note that will be…

Q: heridan, Inc. issued a $125,000, 4-year, 9% note at face value to Flint Hills Bank on January 1,…

A: Journal Entry:   Journal entry has two effects for every transaction. The journal entry is passed by…

Q: On December 31, 2020, Sheridan Company has $5970000 of short-term notes payable due on February 14,…

A: ANSWER : Correct option is- $840,000.

Q: Franny Realty loaned money and received the following notes during 2024. (Click the icon to view the…

A: The idea of the time value of money (TVM) holds that a quantity of money is worth more now than it…

Q: On September 1, 2021, Middleton Corp. lends cash and accepts a $1,200 note receivable that offers 6%…

A: Interest revenue for the period from September 1, 2021 to December 31, 2021 will be recognized in…

Q: On January 1, 2018, the Merit Group issued to its bank a $41 million, five-year installment note to…

A: Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and…

Q: ook Inc. accepts on April 1, 2022 a 120-day 12% note for $8,000 worth of accounts receivable past…

A: At maturity, notes are often utilized in a variety of financial transactions, including loans,…

Q: Analyze and review the following items and determine the appropriate journal entry.  Bank Loan…

A: Journal entries are the entries to be recorded in the accounting books of the business for all the…

Q: Sammy Company, a calendar-year company, has a 6% note receivable dated November 1, 2020 in the…

A: Answer) In the given question, the company had note receivable of P 3,000,000 on November 1, 2020…

Q: Showtime​, Inc. borrows $160,000 by issuing an 8%​, 5​-year note on January ​1, 2020. Showcase must…

A: Journal entries used to record accounting transactions in chronological order under double entry…

Q: the pita pit borrowed 197000 on november 1 2021 and signed a six month note bearing interest at 12%.…

A: Interest expense = Principal amount x Interest rate x Time period

Q: On January 1, 2020, MWB, Inc. borrowed cash by issuing a $600,000, 6-year note that specified 6%…

A: solution given Face value $600000 Life 6 year Coupon rate 6%   If interest to…

Q: Cucina Corporation signed a new installment note on January 1, 2021, and deposited the proceeds of…

A: The process of recording business transactions in the books of accounts for the first time is…

Q: On June 30, 2020, GHI Company discounted at the bank a customer P6,000,000, 6-month, 10% note…

A: A note receivable is an instrument that promises the holder of the note a certain amount of sum…

Q: In January 1, 2020, Mega Corporation issued a $55,000, three-year, 6% installment note from Biggest…

A: In January 1, 2020, Mega Corporation issued a $55,000, three-year, 6% installment note from Biggest…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.