The geological consulting firm of Gilbert, Marsh, & Kester prepares adjusting entries on a monthly basis. Among the items requiring adjustment on December 31, year 2, are the following. The company has outstanding a $50,000, 9 percent, 2-year note payable issued on July 1, year 1. Payment of the $50,000 note, plus all accrued interest for the 2-year loan period, is due in full on June 30, year 3. The firm is providing consulting services to Texas Oil Company at an agreed-upon rate of $1,000 per day. At December 31, 10 days of unbilled consulting services have been provided. Instructions: Assume that the $50,000 note payable plus all accrued interest are paid in full on June 30, year 3. What portion of the total interest expense associated with this note will be reported in the firm’s year 3 income statement?
The geological consulting firm of Gilbert, Marsh, & Kester prepares adjusting entries on a monthly basis. Among the items requiring adjustment on December 31, year 2, are the following. The company has outstanding a $50,000, 9 percent, 2-year note payable issued on July 1, year 1. Payment of the $50,000 note, plus all accrued interest for the 2-year loan period, is due in full on June 30, year 3. The firm is providing consulting services to Texas Oil Company at an agreed-upon rate of $1,000 per day. At December 31, 10 days of unbilled consulting services have been provided. Instructions: Assume that the $50,000 note payable plus all accrued interest are paid in full on June 30, year 3. What portion of the total interest expense associated with this note will be reported in the firm’s year 3 income statement?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The geological consulting firm of Gilbert, Marsh, & Kester prepares
- The company has outstanding a $50,000, 9 percent, 2-year note payable issued on July 1, year 1. Payment of the $50,000 note, plus all accrued interest for the 2-year loan period, is due in full on June 30, year 3.
- The firm is providing consulting services to Texas Oil Company at an agreed-upon rate of $1,000 per day. At December 31, 10 days of unbilled consulting services have been provided.
Instructions:
Assume that the $50,000 note payable plus all accrued interest are paid in full on June 30, year 3. What portion of the total interest expense associated with this note will be reported in the firm’s year 3 income statement?
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