Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40.3 million cash on October 1, 2024, to provide working capital for anticipated expansion. Precision signs a one-year, 8% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Precision Castparts has a December 31 year- end. Required: 1. How will the issuance of the note payable affect the financial statements of Precision Castparts on October 1, 2024? 2. How will the accrued interest on the note payable affect the financial statements of Precision Castparts at the end of the fiscal year (December 31, 2024)? 3. How will the repayment of the note and interest on September 30, 2025, affect the financial statements of Precision Castparts? Note: Amounts to be deducted should be indicated by a minus sign. Enter your answers in dollars, not in millions (i.e., $5.5 million should be entered as $5,500,000). Complete this question by entering your answers in the tabs below. October 01 2024 December 31 September 30 2024 2025 How will the repayment of the note and interest on September 30, 2025, affect the financial statements of Precision Castparts? Cash Assets Balance Sheet ✓$ 40,300,000 Notes Payable Interest Payable Liabilities $ $ 2,478,000x 2,478,000 X Answer is not complete. Stockholders' Equity Common Stock Retained Earnings Revenues Income Statement Expenses Interest Expense $2,418,000✔ Net Income
Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40.3 million cash on October 1, 2024, to provide working capital for anticipated expansion. Precision signs a one-year, 8% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Precision Castparts has a December 31 year- end. Required: 1. How will the issuance of the note payable affect the financial statements of Precision Castparts on October 1, 2024? 2. How will the accrued interest on the note payable affect the financial statements of Precision Castparts at the end of the fiscal year (December 31, 2024)? 3. How will the repayment of the note and interest on September 30, 2025, affect the financial statements of Precision Castparts? Note: Amounts to be deducted should be indicated by a minus sign. Enter your answers in dollars, not in millions (i.e., $5.5 million should be entered as $5,500,000). Complete this question by entering your answers in the tabs below. October 01 2024 December 31 September 30 2024 2025 How will the repayment of the note and interest on September 30, 2025, affect the financial statements of Precision Castparts? Cash Assets Balance Sheet ✓$ 40,300,000 Notes Payable Interest Payable Liabilities $ $ 2,478,000x 2,478,000 X Answer is not complete. Stockholders' Equity Common Stock Retained Earnings Revenues Income Statement Expenses Interest Expense $2,418,000✔ Net Income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40.3 million cash on
October 1, 2024, to provide working capital for anticipated expansion. Precision signs a one-year, 8% promissory note to Midwest Bank
under a prearranged short-term line of credit. Interest on the note is payable at maturity. Precision Castparts has a December 31 year-
end.
Required:
1. How will the issuance of the note payable affect the financial statements of Precision Castparts on October 1, 2024?
2. How will the accrued interest on the note payable affect the financial statements of Precision Castparts at the end of the fiscal
year (December 31, 2024)?
3. How will the repayment of the note and interest on September 30, 2025, affect the financial statements of Precision Castparts?
Note: Amounts to be deducted should be indicated by a minus sign. Enter your answers in dollars, not in millions (i.e., $5.5 million
should be entered as $5,500,000).
Complete this question by entering your answers in the tabs below.
October 01
2024
December 31 September 30
2024
2025
Cash
How will the repayment of the note and interest on September 30, 2025, affect the financial statements of Precision Castparts?
Assets
40,300,000
Balance Sheet
Notes Payable
Interest Payable
Liabilities
2,478,000
2,478,000 X
X Answer is not complete.
Stockholders' Equity
Common
Stock
Retained
Earnings
Revenues
Income Statement
Expenses
Interest Expense
$2,418,000
Net
Income
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