Sterling Inc. has two long-term notes outstanding. One is a five-year note for $50,000. An equal amount of principal must be repaid each year of the loan. The other is a seven-year note for $210,000. In the next calendar year, the company will pay $21,000 of the principal. What is total amount of the notes that will be reported as current liabilities on its balance sheet? Oa. $229,000 Ob. $31,000 Oc. $71,000 Od. $40,000

Sterling Inc. has two long-term notes outstanding. One is a five-year note for $50,000. An equal amount of principal must be repaid each year of the loan. The other is a seven-year note for $210,000. In the next calendar year, the company will pay $21,000 of the principal. What is total amount of the notes that will be reported as current liabilities on its balance sheet? Oa. $229,000 Ob. $31,000 Oc. $71,000 Od. $40,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2021, Oceanic Bank made a P1,000,000, 8% loan. The P80,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. At the end of 2021, the first year's interest of P80,000 has not yet been received because the borrower is experiencing financial difficulties. The borrower negotiated a restructuring of the loan. The payment of all of the interest for 5 years will be delayed until the end of the 5- year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000.The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2021 in connection with the loan. What is the loan impairment loss on December 31, 2021? a. 338,500 O b. 238,500 c. 388,000 O d. 288,000
Sharapova Inc. borrowed $50,000 from Kerber Bank and signed a 5-year note payable stating the interest rate was 5% compounded annually. Sharapova Inc. will make payments of $11,548.74 at the end of each year. Prepare an amortization table showing the principal and interest in each payment. Annual Period Interest Expense Annual Payment Principal Payment Ending Balance 1 2 3 4 5 PLEASE NOTE: All dollar amounts will be rounded to two decimal places with "$" and commas as needed (i.e. $12,345.67). For the journal entry, you must enter the account names exactly as written below and for accounts having similar accounting treatment (DR or CR), you are to record Balance Sheet accounts first, followed by Income Statement accounts. Based on the amortization schedule above and using the following accounts, Principal Payment Cash Interest Income LT Notes Payable Annual Payment Interest Expense provide the journal entry for the…
Bridgeport Company has a line of credit with National Bank. Bridgeport can borrow up to $1,040,000 at any time over the course of the Year 1 calendar year. The following table shows the prime rate expressed as an annual percentage, along with the amounts borrowed and repaid during the first two months of Year 1. Bridgeport agreed to pay interest at an annual rate equal to 1 percent above the bank's prime rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. For example, Bridgeport pays 4 percent (3 percent + 1 percent) annual interest on $154,800 for the month of January. Month January February Month Amount borrowed or (repaid) January February $154,800 (31,600) Required: Compute the amount of (a) interest paid and (b) Bridgeport's liability balance at the end of each of the first two months. Prime rate for the (a) Interest Paid month 3% 3.5% (b)…
Sammy Company, a calendar-year company, has a 6% note receivable dated November 1, 2020 in the original amount of P3,000,000. Payments of P1,000,000 in principal plus interest on the outstanding balance are due annually on October 31, 2021, 2022 and 2023. How much is the interest revenue from the note for the year ended December 31, 2021?
Today is June 1. Sustainable Corporation has an obligation of $25 million coming due on August 1. The company is planning to borrow this amount on August 1 to fulfill its obligation, and plans to pay back the loan on December 1. The company’s borrowing rate is LIBOR + 125 basis points. The company’s bank presents it with the following LIBOR term structure: # days LIBOR 30 0.90% 60 1.00% 90 1.05% 120 1.10% 150 1.15% 180 1.18% 210 1.20% 240 1.21% For the calculation of interest, the bank assumes 30 days in a month, and 360 days in a year. Ms. Devro, the VP Finance of Sustainable, is worried that LIBOR will increase between June and August, thus increasing the company’s borrowing cost. She advises that the company enters into a forward rate agreement (FRA) with its bank to hedge its interest rate risk. She has asked you, the treasurer of the company, to present her with answers to the following questions: a. Should Sustainable…
Jhar Industries has borrowed $125,000 under a line-of-credit agreement. While the company normally maintains a checking account balance of $15,000 in the lending bank, this credit line requires a 20% compensating balance. The stated interest rate on the borrowed funds is 10%. Show Solutions and Explanation. A. What is the effective annual rate of interest on the line of credit? (Format: 11.11%)
Metrobank made a $2,000,000, 8% loan on January 1, 2018. The $160,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. By the end of 2018, the first year's interest of $160,000 has not been received yet because the borrower is experiencing financial troubles. The borrower negotiated a restructuring of the loan. The payment of all of the interest for 5 years will be delayed until the end of the 5 year loan term. In addition, the amount of principal repayment will be dropped from $2,000,000 to $1,200,000. The Present Value of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2018 in connection with the loan. What is the loan impairment loss for 2018?
Today is June 1. Sustainable Corporation has an obligation of $25 million coming due on August 1. The company is planning to borrow this amount on August 1 to fulfill its obligation, and plans to pay back the loan on December 1. The company’s borrowing rate is LIBOR + 125 basis points. The company’s bank presents it with the following LIBOR term structure: # days LIBOR 30 0.90% 60 1.00% 90 1.05% 120 1.10% 150 1.15% 180 1.18% 210 1.20% 240 1.21% For the calculation of interest, the bank assumes 30 days in a month, and 360 days in a year. Ms. Devro, the VP Finance of Sustainable, is worried that LIBOR will increase between June and August, thus increasing the company’s borrowing cost. She advises that the company enters into a forward rate agreement (FRA) with its bank to hedge its interest rate risk. She has asked you, the treasurer of the company, to present her with answers to the following questions: c. July 1 is the end…
On January 1, 2021, a company borrowed $500,000 from a local bank by issuing an 8% note due in four years. The bank requires the company to make annual installment payments of $150,960.40 each December 31 over the four years.Required:(a) Complete the amortization schedule for the four-year loan, (b) record the issuance of the note, and record the (c) first annual installment payment and (d) second annual installment payment. How would your answers change if the company borrowed only $400,000 at 6% for four years?
18. At year end, Rei company issued a P2,000,000 face amount note payable in exchange for services rendered. The note, made at usual trade terms, is due in nine months and bears interest, payable at maturity, at the annual rate of 3%. The market interest rate is 8%. The compound interest factor of 1 due in nine months at 8% is .944. At what amount should the note payable be reported at year-end?
Colson Company has a line of credit with Federal Bank. Colson can borrow up to $407,000 at any time over the course of the Year 1 calendar year. The following table shows the prime rate expressed as an annual percentage, along with the amounts borrowed and repaid during the first four months of Year 1. Colson agreed to pay Interest at an annual rate equal to 2.00 percent above the bank's prime rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. For example, Colson pays 6.25 percent (4.25 percent - 2.00 percent) annual Interest on $83,300 for the month of January. Month January February Month January February March April March April Required: a. Compute the amount of Interest that Colson will pay on the line of credit for the first four months of Year 1. Note: Do not round intermediate calculations. Round your final answers to the nearest whole…
Jasper makes a $25,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the collection of the note and interest at maturity should be: (Use 360 days a year.)