Jacobi Supply Company recently ran into certain financial difficulties that have resulted in the initiation of voluntary settlement procedures. The firm currently has $150,000 in outstanding debts and approximately $75,000 in liquidatable short-term assets. Each creditor will be paid 50 cents on the dollar immediately, and the debts will be considered fully satisfied. Indicate whether the plan is an extension, a composition, or a combination of the two. Also indicate the cash payments and timing of the payments required of the firm under the plan.
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Jacobi Supply Company recently ran into certain financial difficulties that have resulted in the initiation of voluntary settlement procedures. The firm currently has $150,000 in outstanding debts and approximately $75,000 in liquidatable short-term assets.
Each creditor will be paid 50 cents on the dollar immediately, and the debts will be considered fully satisfied. Indicate whether the plan is an extension, a composition, or a combination of the two. Also indicate the cash payments and timing of the payments required of the firm under the plan.
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- Jacobi Supply Company recently ran into certain financial difficulties that have resulted in the initiation of voluntary settlement procedures. The firm currently has $150,000 in outstanding debts and approximately $75,000 in liquidatable short-term assets. Each creditor will be paid 50 cents on the dollar immediately, and the debts will be considered fully satisfied. Indicate whether the plan is an extension, a composition, or a combination of the two. Indicate the cash payments and timing of the payments required of the firm under the plan.On April 1, 2024, Macomb Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Macomb's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Macomb agrees to lend $470,000 to its supplier using a 12-month, 11% note. Required: Record the following transactions for Macomb Corporation: 1. The loan of $470,000 and acceptance of the note receivable on April 1, 2024. 2. The adjusting entry for accrued interest on December 31, 2024. 3. Cash collection of the note and interest on April 1, 2025.ABC Limited has a notes payable of $50,000 which will mature in five months. Management has both the intent and the ability to refinance it by taking out a new loan of the same amount at the due date which would be due only after 5 years. How would this situation be reported in financial statements prepared as of today's date? A: The original notes payable of $50,000 is classified as current, with a footnote describing management's plan for refinancing. B: The original notes payable of $50,000 is classified as current and the new loan is reported as a long-term liability. C: The original notes payable of $50,000 is classified as long-term; the new loan of $50,000 is not included in liabilities at this date. D: The original notes payable of $50,000 need not be reported at all; only the new loan of $50,000 is reported as a long-term liability.
- On April 1, 2024, Washtenaw Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Washtenaw's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Washtenaw agrees to lend $480,000 to its supplier using a 12-month, 12% note. Required: Record the following transactions for Washtenaw Corporation: 1. The loan of $480,000 and acceptance of the note receivable on April 1, 2024. 2. The adjusting entry for accrued interest on December 31, 2024. 3. Cash collection of the note and interest on April 1, 2025. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 1 Record the loan of $480,000 and acceptance of the note receivable on April 1, 2024. 2 Note: Enter debits before credits. Date April 01, 2024 Record entry Credit > View general journalOn April 1, 2021, Shoemaker Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Shoemaker’s business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Shoemaker agrees to lend $600,000 to its supplier using a 12-month, 11% note. Required: Record the following transactions for Shoemaker Corporation. 1. The loan of $600,000 and acceptance of the note receivable on April 1, 2021. 2. The adjustment for accrued interest on December 31, 2021. 3. Cash collection of the note and interest on April 1, 2022.On December 31, 2020, Ed Abbey Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Abbey Co. agreed to accept a $200,000 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Abbey is much more creditworthy and has various lines of credit at 6%. Instructions a. Prepare the journal entry to record the transaction of December 31, 2020, for the Ed Abbey Co. b. Assuming Ed Abbey Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2021. c. Assuming Ed Abbey Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2022. *Explained step by step please.
- On December 31, 2020, Ed Abbey Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Abbey Co. agreed to accept a $200,000 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Abbey is much more creditworthy and has various lines of credit at 6%. Instructions a. Prepare the journal entry to record the transaction of December 31, 2020, for the Ed Abbey Co. b. Assuming Ed Abbey Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2021. c. Assuming Ed Abbey Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2022.Monterry Corporation has an existing loan in the amount of 7 million with an annual interest rate of 6.5% The company provides an internal company - prepared financial statement to the bank under the loan agreement. Two competing banks have offered to replace Monterrey Corporation's existing loan agreement with a new one. Southwest National Bank has offered to loan Monterrey 7 million at a rate of 5.5% but requires Monterrey to provide financial statements that have been reviewed by a CPA firm. First City Bank has offered to loan Monterrey 7 million at a rate of 4.5% but requires to provide financial statements that have been audited by a CPA firm. Monterrey Corporation's controller approached a CPA firm and was given an estimated cost of $45,000 to perform a review and $80,000 to perform an audit.Busch Corporation has an existing loan in the amount of $6 millionwith an annual interest rate of 6.0%. The company provides an internal companyprepared financial statement to the bank under the loan agreement. Two competingbanks have offered to replace Busch Corporation’s existing loan agreement with a newone. United National Bank has offered to loan Busch $6 million at a rate of 5.0% butrequires Busch to provide financial statements that have been reviewed by a CPA firm.First City Bank has offered to loan Busch $6 million at a rate of 4.0% but requires Busch toprovide financial statements that have been audited by a CPA firm. Busch Corporation’scontroller approached a CPA firm and was given an estimated cost of $35,000 to performa review and $60,000 to perform an audit.a. Explain why the interest rate for the loan that requires a review report is lower thanthat for the loan that did not require a review. Explain why the interest rate for the loanthat requires an audit report is lower…
- On December 31, 2020, Larkspur Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Larkspur Co. agreed to accept a $ 252,100 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Larkspur is much more creditworthy and has various lines of credit at 6%.Click here to view factor table.Dunder Corporation has an existing loan in the amount of $8 million with an annual interest rate of 6.0%. The company provides an internal company-prepared financial statement to the bank under the loan agreement. Two competing bank: have offered to replace Dunder Corporation's existing loan agreement with a new one. Sunset Lending Bank has offere to loan Dunder $8 million at a rate of 5.2% but requires Dunder to provide financial statements that have been reviewed by a CPA firm. Big Top Bank has offered to loan Dunder $8 million at a rate of 4.4% but requires Dunder to provide financial statements that have been audited by a CPA firm. Dunder Corporation's controller approached a CPA firm and was given an estimated cost of $29,000 to perform a review and $51,000 to perform an audit. Read the requirements. (Enter amounts in dollars, not millions, throughout.) of the lower information risk. A review report provides moderate users. Compared to a review report, an audit provides further…Maris Bank has analyzed the accounts receivable of Anthony Software, Inc. The bank has chosen eight accounts totaling $134,000 that it will accept as collateral. The bank’s terms include a lending rate set at prime 3% and a 2% commission charge. The prime rate currently is 8.5%. Show Solutions and Explanation. A. The bank will adjust the accounts by 10% for returns and allowances. It then will lend up to 85% of the adjusted acceptable collateral. What is the maximum amount that the bank will lend to Anthony Software? (Format: 111,111) B. What is Anthony Software’s effective annual rate of interest if it borrows $100,000 for 12 months? (Note: Assume a 365-day year and a prime rate that remains at 8.5% during the life of the loan.) (Format: 11.1%)