Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note. Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest. To prepare: A table for the installment note.

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Answer 1

Question

Chapter 10, Problem 10.21EX

A.

To determine

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To prepare: A table for the installment note.

B.

To determine

To journalize: The entries to record issuance of note and the four annual note payments.

C.

To determine

To explain: How the annual note payment would be reported on the Year 1 income statement.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 10, Problem 10.21EX

A.

To determine

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To prepare: A table for the installment note.

B.

To determine

To journalize: The entries to record issuance of note and the four annual note payments.

C.

To determine

To explain: How the annual note payment would be reported on the Year 1 income statement.

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Answer 3

Question

Chapter 10, Problem 10.21EX

A.

To determine

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To prepare: A table for the installment note.

B.

To determine

To journalize: The entries to record issuance of note and the four annual note payments.

C.

To determine

To explain: How the annual note payment would be reported on the Year 1 income statement.

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Answer 4

Question

Chapter 10, Problem 10.21EX

A.

To determine

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To prepare: A table for the installment note.

B.

To determine

To journalize: The entries to record issuance of note and the four annual note payments.

C.

To determine

To explain: How the annual note payment would be reported on the Year 1 income statement.

Expert Solution & Answer

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Answer 5

Chapter 10, Problem 10.21EX

A.

To determine

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To prepare: A table for the installment note.

B.

To determine

To journalize: The entries to record issuance of note and the four annual note payments.

C.

To determine

To explain: How the annual note payment would be reported on the Year 1 income statement.

Answer 6

Chapter 10, Problem 10.21EX

A.

To determine

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To prepare: A table for the installment note.

Answer 7

Chapter 10, Problem 10.21EX

A.

To determine

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To prepare: A table for the installment note.

Answer 8

B.

To determine

To journalize: The entries to record issuance of note and the four annual note payments.

Answer 9

B.

To determine

To journalize: The entries to record issuance of note and the four annual note payments.

Answer 10

C.

To determine

To explain: How the annual note payment would be reported on the Year 1 income statement.

Answer 11

C.

To determine

To explain: How the annual note payment would be reported on the Year 1 income statement.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

Ch. 10 - Does a discounted note payable provide credit...Ch. 10 - Employees are subject to taxes withheld from their...Ch. 10 - Prob. 3DQ Ch. 10 - Prob. 4DQ Ch. 10 - Prob. 5DQ Ch. 10 - To match revenues and expenses properly, should...Ch. 10 - Prob. 7DQ Ch. 10 - Prob. 8DQ Ch. 10 - When should the liability associated with a...Ch. 10 - Prob. 10DQ

Solution Summary: The author explains that an installment note is a debt in which the borrower pays equal periodic payments to the lender based on the term of the note.

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To journalize: The entries to record issuance of note and the four annual note payments.

To explain: How the annual note payment would be reported on the Year 1 income statement.

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Chapter 10 Solutions