Question 4 On January 1, 2019, Madira Company loaned $216,374 to Virginia Company. A zero-interest- bearing note (face amount, $288,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2021. The prevailing rate of interest for a loan of this type is 10% . The present value of $288,000 at 10% for three years is $216,374. What is the book value (carrying amount) of the note on Virginia's balance sheet on December 31st, 2019 (round to the nearest dollar)? Question 5 The cost of issuing common stock should be O reported in Accumulated Other Comprehensive Income in the balance sheet O deducted from the Paid-in Capital in Excess of Par account charged to the income statement as an expense in the year the stock is issued O None of these statements is correct
Question 4 On January 1, 2019, Madira Company loaned $216,374 to Virginia Company. A zero-interest- bearing note (face amount, $288,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2021. The prevailing rate of interest for a loan of this type is 10% . The present value of $288,000 at 10% for three years is $216,374. What is the book value (carrying amount) of the note on Virginia's balance sheet on December 31st, 2019 (round to the nearest dollar)? Question 5 The cost of issuing common stock should be O reported in Accumulated Other Comprehensive Income in the balance sheet O deducted from the Paid-in Capital in Excess of Par account charged to the income statement as an expense in the year the stock is issued O None of these statements is correct
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 4
On January 1, 2019, Madira Company loaned $216,374 to Virginia Company. A zero-interest-
bearing note (face amount, $288,000) was exchanged solely for cash; no other rights or privileges
were exchanged. The note is to be repaid on December 31, 2021. The prevailing rate of interest
for a loan of this type is 10% . The present value of $288,000 at 10% for three years is $216,374.
What is the book value (carrying amount) of the note on Virginia's balance sheet on December
31st, 2019 (round to the nearest dollar)?
Question 5
The cost of issuing common stock should be
reported in Accumulated Other Comprehensive Income in the balance sheet
deducted from the Paid-in Capital in Excess of Par account
charged to the income statement as an expense in the year the stock is issued
None of these statements is correct
Question 6
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