[The following information applies to the questions displayed below.]On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $100,000 face value, four-year term note thathad an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $30,192 that includeboth interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land thatgenerated rental revenues of $52,000 cash per year.b. Organize the information in accounts under an accounting equation. (Round your answers to the nearest whole dollar amount.Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles / Retained Earnings,leave the cell blank.)BROWN CO.Effect of Events on the Accounting Equation2018, 2019, 2020 and 2021StockholdersEquityRetainedEarningsAssets= LiabilitiesAccounts Titles /EventRetained EarningsNotesPayableCashLand20181/11/1%3D12/3112/31Bal.2019Beg. bal.12/3112/31End. bal.%3D2020Beg. bal.%3D12/3112/31End. bal.2021Beg. bal.12/3112/31End. bal.

The accounting equation is sum of assets=sum of liabilities and owner's equity. The items of income…

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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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On November 1, 2021, Quantum Technology, a geothermal energy supplier, borrowed $4 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 9% promissory note. Interest was payable at maturity. Quantum's fiscal period is the calendar year. Required: 1. Prepare the journal entry for the issuance of the note by Quantum Technology. 2. & 3. Prepare the appropriate adjusting entry for the note by Quantum on December 31, 2021 and journal entry for the payment of the note at maturity. (For all requirements, If no entry is required for a transaction/event, select "No journal entry required" In the first account fleld. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 1 2 Record the issuance of the note by Quantum Technology. Date November 01, 2021 3 Note: Enter debits before credits. Record entry General Journal Clear entry Debit Credit View general…
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.)
On January 1, 2018, Nantucket Ferry borrowed $14,000,000 cash from BankOne and issued a four-year,$14,000,000, 6% note. Interest was payable annually on December 31. Prepare the journal entries for both firmsto record interest at December 31, 2018.
On January 1, 2024, the Ward Company purchased land from the Fisher Company in exchange for a $1,000,000 face value noninterest-bearing note payable, due in five equal installments of $200,000, with the first payment due December 31, 2024. The face value of the note includes interest and principal. There was no established interest rate for this note but the prevailing interest rate for similar notes is 12% APR. Present value factors from tables are listed below: Present value of single sum, 5 periods, 12% Present value of ordinary annuity, 5 periods, 12% Present value of annuity due, 5 periods, 12% Future value of single sum, 5 periods, 12% 0.56743 3.60478 4.03735 1.76234 Future value of ordinary annuity, 5 periods, 12% 6.35285 Instructions: Prepare the journal entries to record: (A) the issuance of the note payable on January 1, 2024, and (B) the first payment on December 31, 2024 and any amortization, assuming the effective interest rate method is used.
Colson Company has a line of credit with Federal Bank. Colson can borrow up to $800,000 at any time over the course of the 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 the year. Colson agreed to pay interest at an annual rate equal to 2 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 percent (4 percent + 2 percent) annual interest on $80,000 for the month of January. Month January February March April Amount Borrowed or (Repaid) $ 80,000 50,000 (30,000) 20,000 Required a. Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. b. Compute the amount of Colson's liability at the end of each of the first four months.…
Singer Company has a line of credit with United Bank. Singer can borrow up to $400,000 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 three months of Year 1. Singer agreed to pay interest at an annual rate equal to 2 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, Singer pays 6.5 percent (4.5 percent + 2 percent) annual interest on $140,000 for the month of February. Month Amount Borrowed or (Repaid) Prime Rate for the Month January $80,000 4.0% February 60,000 4.5 March (20,000) 4.0 Required Provide all journal entries pertaining to Singer’s line of credit for the first three months of Year 1.
On the first day of the fiscal year, Shiller Company borrowed $26,000 by giving a three-year, 12% installment note to Soros Bank. The note requires annual payments of $10,952, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $3,120 and principal repayment of $7,832. Journalize the entries to record the following: a1. Issued the installment note for cash on the first day of the fiscal year. If an amount box does not require an entry, leave it blank. a2. Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank. b. How would the notes payable be reported on the balance sheet at the end of the fiscal year?
Purdum Farms borrowed $10 million by signing a five-year note on December 31, 2015. Repayments of the principal are payable annually in installments of $2 million each. Purdum Farms makes the first payment on December 31, 2016 and then prepares its balance sheet. What amount will be reported as current and long-term liabilities, respectively, in connection with the note at December 31, 2016, after the first payment is made? Zero in current liabilities and $10 million in long-term liabilities. $2 million in current liabilities and $6 million in long-term liabilities. $2 million in current liabilities and $8 million in long-term liabilities. Zero in current liabilities and $8 million in long-term liabilities.
prepare a three-year (monthly) amortization schedule to classify the notes payable into its current and long-term amounts. See October 1, 2020 transaction for details of loan. October 1 - Bought office equipment for $15,000 and signed a three-year promissory note with a local bank. The annual interest rate is 5%, with monthly payments of $449.56 beginning on November 1.
On November 1, 2024, Quantum Technology, a geothermal energy supplier, borrowed $5 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 6% promissory note. Interest was payable at maturity. Quantum’s fiscal period is the calendar year. Required: 1. Prepare the journal entry for the issuance of the note by Quantum Technology. 2. & 3. Prepare the appropriate adjusting entry for the note by Quantum on December 31, 2024 and journal entry for the payment of the note at maturity. Note: For all requirements, if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.
Lang Warehouses borrowed $100,000 from a bank and signed a note requiring 20 annual payments of $13,388 beginning one year from the date of the agreement. Required: Determine the interest rate implicit in this agreement.
Colson Company has a line of credit with Federal Bank. Colson can borrow up to $436,000 at any time over the course of the 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 the year. 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 $77,700 for the month of January. Amount Borrowed Prime Rate for the Month Month January February March April or (Repaid) $ 77,700 4.25% 120,700 (16,500) 28,400 3.25 3.75 4.25 Required a. Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. b. Compute the amount of…

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