Question Content Area Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $740,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9.00%. Each year on December 31, the company pays down the principal balance by $83,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. Question Content Area A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. $fill in the blank 462c1ff52fc4fdd_1 B. Compute the interest accrued on December 31 of the first year. $fill in the blank 462c1ff52fc4fdd_2 Question Content Area C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year. If an amount box does not require an entry, leave it blank. Dec. 31 - Select - - Select - - Select - - Select -

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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Question Content Area

Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $740,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9.00%. Each year on December 31, the company pays down the principal balance by $83,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year.

Question Content Area

A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest.

$fill in the blank 462c1ff52fc4fdd_1

B. Compute the interest accrued on December 31 of the first year.

$fill in the blank 462c1ff52fc4fdd_2

Question Content Area

C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year. If an amount box does not require an entry, leave it blank.