Recording Entries for Interest-Bearing and Noninterest-Bearing Notes Anne Taylor Company borrowed cash on August 1 of Year 1, by signing a $66,600 (face amount), one-year note payable, due on July 31 of Year 2. The accounting period of Anne Taylor ends December 31. Assume an effective interest rate of 11%. Interest-Bearing Note a. How much cash should Anne Taylor Company receive from the note on August 1 of Year 1, assuming the note is an interest-bearing note? $ b. Provide the following entries and reporting amounts: 1. August 1 of Year 1, date of the loan. 2. December 31 of Year 1, adjusting entry. 3. July 31 of Year 2, payment of the note • Note: Round your answers to the nearest whole dollar. Account Name Date 1. Aug. 1, Year 1 2. Dec. 31, Year 1 3. July 31, Year 2 To record issue of note. Show Transcribed Text Current liabilities Note Payable To record year-end adjusting entry. To record payment of note. Balance Sheet, Dec. 31 c. What liability amounts should be shown on the December 31 of Year 1 Show Transcribed Text C. Current liabilities C C ➜ $ Balance Sheet, Dec. 31 Year 1 + S Year 1 Dr. Cr. Noninterest-Bearing Note d. Answer (a) and (c) assuming that the note is noninterest-bearing. Use the straight-line method to amortize any discount on note payable. a. How much cash should Anne Taylor Company receive from the note on August 1 of Year 1, assuming the note is a noninterest-bearing note? $ c. What liability amounts should be shown on the December 31 of Year 1 balance sheet? ce sheet?
Recording Entries for Interest-Bearing and Noninterest-Bearing Notes Anne Taylor Company borrowed cash on August 1 of Year 1, by signing a $66,600 (face amount), one-year note payable, due on July 31 of Year 2. The accounting period of Anne Taylor ends December 31. Assume an effective interest rate of 11%. Interest-Bearing Note a. How much cash should Anne Taylor Company receive from the note on August 1 of Year 1, assuming the note is an interest-bearing note? $ b. Provide the following entries and reporting amounts: 1. August 1 of Year 1, date of the loan. 2. December 31 of Year 1, adjusting entry. 3. July 31 of Year 2, payment of the note • Note: Round your answers to the nearest whole dollar. Account Name Date 1. Aug. 1, Year 1 2. Dec. 31, Year 1 3. July 31, Year 2 To record issue of note. Show Transcribed Text Current liabilities Note Payable To record year-end adjusting entry. To record payment of note. Balance Sheet, Dec. 31 c. What liability amounts should be shown on the December 31 of Year 1 Show Transcribed Text C. Current liabilities C C ➜ $ Balance Sheet, Dec. 31 Year 1 + S Year 1 Dr. Cr. Noninterest-Bearing Note d. Answer (a) and (c) assuming that the note is noninterest-bearing. Use the straight-line method to amortize any discount on note payable. a. How much cash should Anne Taylor Company receive from the note on August 1 of Year 1, assuming the note is a noninterest-bearing note? $ c. What liability amounts should be shown on the December 31 of Year 1 balance sheet? ce sheet?
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter17: Accounting For Notes And Interest
Section: Chapter Questions
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
Transcribed Image Text:Recording Entries for Interest-Bearing and Noninterest-Bearing Notes
Anne Taylor Company borrowed cash on August 1 of Year 1, by signing a $66,600 (face amount), one-year
note payable, due on July 31 of Year 2. The accounting period of Anne Taylor ends December 31. Assume
an effective interest rate of 11%.
Interest-Bearing Note
a. How much cash should Anne Taylor Company receive from the note on August 1 of Year 1, assuming
the note is an interest-bearing note?
$
b. Provide the following entries and reporting amounts:
1. August 1 of Year 1, date of the loan.
2. December 31 of Year 1, adjusting entry.
3. July 31 of Year 2, payment of the note
• Note: Round your ans
Date
1. Aug. 1, Year 1
2. Dec. 31, Year 1
3. July 31, Year 2
Current liabilities
Note Payable
To record issue of note.
Show Transcribed Text
to the nearest whole dollar.
Account Name
To record year-end adjusting entry.
Balance Sheet, Dec. 31
To record payment of note.
3
c. What liability amounts should be shown on the December 31 of Year 1 balance sheet?
Show Transcribed Text
c. Current liabilities
→ $
Balance Sheet, Dec. 31 Year 1
÷ $
Dr.
Year 1
Noninterest-Bearing Note
d. Answer (a) and (c) assuming that the note is noninterest-bearing. Use the straight-line method to
amortize any discount on note pay
Cr.
a. How much cash should Anne Taylor Company receive from the note on August 1 of Year 1, assuming
the note is a noninterest-bearing note?
$
c. What liability amounts should be shown on the December 31 of Year 1 balance sheet?
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