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).
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).
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.
Answer is not complete.
October 01 December 31 September 30
2024
2024
2025
How will the repayment of the note and interest on September 30, 2025, affect the financial statements of Precision Castparts?
Balance Sheet
Assets
Liabilities
Common
Stock
Stockholders' Equity
Retained
Revenues
Earnings
Cash
$ 40,300,000
Notes Payable
$ 2,478,000
Interest Payable
$
2,478,000
Income Statement
Expenses
Net
Income
Interest Expense
$2,418,000
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