The entry to record the issuance of the note payable. Given information: Amount borrowed is $950,000. Note issued for 8 months. Annual interest rate is 6%. Interest is due at maturity.

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Answer 1

Question

Chapter 14, Problem 14.1E

a.

To determine

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

b.

To determine

To prepare: The entry to record the interest accrual at the year end.

c.

To determine

To prepare: The entry to record the payment of the note at maturity.

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If an oil rig was built in the sea, the cost to be capitalised is likely to include the cost of constructing the asset and the present value of the cost of dismantling it. If the asset cost $10 million to construct, and would cost $4 million to remove in 20 years, then the present value of this dismantling cost must be calculated. If interest rates were 5%, the present value of the dismantling costs are calculated as follows: $4 million x 1/1.0520 = $1,507,558 The total to be capitalised would be $10 million + $1,507,558 = $11,507,558. This would be depreciated over 20 years, so 11,507,558 x 1/20 = $575,378 per year. Each year, the liability would be increased by the interest rate of 5%. In year 1 this would mean the liability increases by $75,378 (making the year end liability $1,582,936). This increase is taken to the finance costs in the statement of profit or loss.

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Answer 2

Question

Chapter 14, Problem 14.1E

a.

To determine

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

b.

To determine

To prepare: The entry to record the interest accrual at the year end.

c.

To determine

To prepare: The entry to record the payment of the note at maturity.

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Answer 3

Question

Chapter 14, Problem 14.1E

a.

To determine

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

b.

To determine

To prepare: The entry to record the interest accrual at the year end.

c.

To determine

To prepare: The entry to record the payment of the note at maturity.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.1E

a.

To determine

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

b.

To determine

To prepare: The entry to record the interest accrual at the year end.

c.

To determine

To prepare: The entry to record the payment of the note at maturity.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.1E

a.

To determine

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

b.

To determine

To prepare: The entry to record the interest accrual at the year end.

c.

To determine

To prepare: The entry to record the payment of the note at maturity.

Answer 6

Chapter 14, Problem 14.1E

a.

To determine

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

Answer 7

Chapter 14, Problem 14.1E

a.

To determine

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

Answer 8

b.

To determine

To prepare: The entry to record the interest accrual at the year end.

Answer 9

b.

To determine

To prepare: The entry to record the interest accrual at the year end.

Answer 10

c.

To determine

To prepare: The entry to record the payment of the note at maturity.

Answer 11

c.

To determine

To prepare: The entry to record the payment of the note at maturity.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

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The entry to record the issuance of the note payable. Given information: Amount borrowed is $950,000. Note issued for 8 months. Annual interest rate is 6%. Interest is due at maturity.

Solution Summary: The author explains the process of journalizing the transactions of an organization in a chronological order.

Concept explainers

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.

To prepare: The entry to record the interest accrual at the year end.

To prepare: The entry to record the payment of the note at maturity.

Want to see the full answer?

Chapter 14 Solutions

The entry to record the issuance of the note payable. Given information: Amount borrowed is $950,000. Note issued for 8 months. Annual interest rate is 6%. Interest is due at maturity.

Solution Summary: The author explains the process of journalizing the transactions of an organization in a chronological order.

Concept explainers

To prepare: The entry to record the issuance of the note payable. Given information: Amount borrowed is $950,000. Note issued for 8 months. Annual interest rate is 6%. Interest is due at maturity.

To prepare: The entry to record the interest accrual at the year end.

To prepare: The entry to record the payment of the note at maturity.

Want to see the full answer?

Chapter 14 Solutions

To prepare: The entry to record the issuance of the note payable.

Given information:

Amount borrowed is $950,000.

Note issued for 8 months.

Annual interest rate is 6%.

Interest is due at maturity.