The following selected transactions relate to liabilities of Company A. Company A's fiscal year ends on December 31.January 13 Negotiate a revolving credit agreement with Company B that can be renewed annually upon bank approval. The amount available under the line of credit is $10 million at the banks prime rate.February 1 Arrange a three-month bank loan of $4.1 million with Company B under the line of credit agreement. Interest at the prime rate of 8% is payable at maturity.May 1 Pay the 8% note at maturity.Required:Record the appropriate entries, if any, on January 13, February 1, and May 1. (If no entry is required for a particular transactionlevent, select "No Journal Entry Required" in the first account field. Enteryour answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)View transaction listJournal entry worksheet13>Record the receipt of revolving credit.Note: Enter debits before credits.DateGeneral JournalDebitCreditJanuary 13

From February 1 to May 1 = 3 months So the interest on the note is due for 3 months on May 1.

Answered: The following selected transactions…

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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Colson Company has a line of credit with Federal Bank, Colson can borrow up to $386,000 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 2.50 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 (3.75 percent + 2.50 percent) annual interest on $81,000 for the month of January. Month January February March April Amount Borrowed or (Repaid). $ 81,000 117,900 (24,400) 27,600 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…
The following selected transactions relate to liabilities of Colorado Adventures. Colorado's fiscal year ends on December 31. January 13 Negotiate a revolving credit agreement with First Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $10 million at the bank's prime rate. February 1 Arrange a three-month bank loan of $3.8 million with First Bank under the line of credit agreement. Interest at the prime rate of 7% is payable at maturity. May 1 Pay the 7% note at maturity. Required: Record the appropriate entries, if any, on January 13, February 1, and May 1. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 million should be entered as 5,000,000).)
On the first day of the fiscal year, Shiller Company borrowed $32,000 by giving a 5-year, 11% installment note to Soros Bank. The note requires annual payments of $8,783, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $3,520 and principal repayment of $5,263. Journalize the entries to record the following: Question Content Area 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. blank Account Debit Credit blank Question Content Area a2. Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank. blank Account Debit Credit blank
None
On January 1, 2021, Nantucket Ferry borrowed $14,600,000 cash from BankOne and issued a four-year, $14,600,000, 8% note. Interest was payable annually on December 31. Prepare the journal entries for both firms to record interest at December 31, 2021.
On January 1, Year 1, Niagara Corporation arranges a $6,000 line of credit with Centennial Bank. It accepted the bank's offer of 1% above the prime rate with interest payments on December 31 of each year. All borrowings and repayments are to take place on January 1 of each year. Niagara begins its loan transactions with Centennial Bank by borrowing $2,000 on January 1, Year 1. Which of the following shows the effect of this event on the financial statements? Assets A. 2,000 B. 2,000 C. 2,000 D. 2,000 Multiple Choice O OOO Balance Sheet Liabilities + 2,000 n/a n/a 2,000 Option B Option D Option A Option C Stockholders' Equity n/a 2,000 2,000 n/a Revenue n/a 2,000 2,000 n/a Income Statement Expense n/a n/a n/a n/a = Net Income n/a 2,000 2,000 n/a Statement of Cash Flows 2,000 IA 2,000 IA 2,000 OA 2,000 FA
3. On January 1, Esly Company obtained a $125,000, 7-year 5% installment note from Farmers Bank. The note requires annual payments of $21,602, with the first payment occurring on the last day of the fiscal year. (a) Prepare an amortization schedule for Year 1 and Year 2 Date January 1 carrying amount Note payment Interest expense Decrease in Notes payable (b) Journalize the following entries: a. Issued the installment notes for cash on January 1. Dec 31 carrying amount
Weavile Corporation takes out a $100,000 cash loan from its bank by signing a 30%, 10-month promissory note on July 1. The journal entry at the note's maturity will include: Group of answer choices Debit to Interest Expense for $10,000 Credit to Cash for $100,000 Debit to Interest Expense for $30,000 Debit to Interest Expense for $15,000

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