Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 7, Problem 7Q
Assume that on October 1, 2018, Big Company borrowed $10,000 from the local bank at 6 percent interest. The note is due on October 1, 2019. How much interest does Big pay in 2018? How much interest does Big pay in 2019? What amount of cash does Big pay back in 2019?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Joshua borrowed $500 on January 1, 2021, and paid $30 in interest. The bank charged him a service charge of $21. He paid it all back
at once on December 31, 2021. What was the APR? (Enter your answer as a percent rounded to 1 decimal place.)
APR
%
Florenda Quino Forwarders borrowed P600,000 from the bank on Sept. 1, 2019. The note carried an 8% annual rate of interest and was set to mature on Feb. 29, 2020.
Interest and principal were paid in cash on the maturity date.
Required:
1. What was the amount of interest expense paid in cash in 2019?
2. What was the amount of interest expense recognized on the 2019 income statement?
3. What was the amount of total liabilities shown on the 2019 balance sheet?
4. What was the total amount of cash that was paid to the bank on Feb. 29, 2020 for principal and interest?
5. What was the amount of interest expense shown on the 2020 income statement?
2. On April 1, 2021, Faircloud Variety Company deposited $24 000 into a
savings account earning simple interest of 1.5%. How much interest was
paid to Faircloud's account on June 30, 2021?
Chapter 7 Solutions
Survey Of Accounting
Ch. 7 - 1. What type of transaction is a cash payment to...Ch. 7 - Prob. 2QCh. 7 - How does recording accrued interest affect the...Ch. 7 - 4. Who is the maker of a note payable?Ch. 7 - How does the going concern assumption discussed in...Ch. 7 - 6. Why is it necessary to make an adjusting entry...Ch. 7 - Assume that on October 1, 2018, Big Company...Ch. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10Q
Ch. 7 - 11. Are contingent liabilities recorded on a...Ch. 7 - Prob. 12QCh. 7 - Prob. 13QCh. 7 - Prob. 14QCh. 7 - Prob. 15QCh. 7 - Prob. 16QCh. 7 - 1. What is the difference between classification...Ch. 7 - 2. At the beginning of Year 1, B Co. has a note...Ch. 7 - 3. What is the purpose of a line of credit for a...Ch. 7 - 4. What are the primary sources of debt financing...Ch. 7 - 5. What are some advantages of issuing bonds...Ch. 7 - 6. What are some disadvantages of issuing bonds?Ch. 7 - 7. Why can a company usually issue bonds at a...Ch. 7 - 15. If Roc Co. issued 100,000 of 5 percent,...Ch. 7 - 16. What is the mechanism is used to adjust the...Ch. 7 - 17. When the effective interest rate is higher...Ch. 7 - 18. What type of transaction is the issuance of...Ch. 7 - 19. What factors may cause the effective interest...Ch. 7 - 20. If a bond is selling at 97, how much cash will...Ch. 7 - Prob. 30QCh. 7 - 22. Gay Co. has a balance m the Bonds Payable...Ch. 7 - Prob. 32QCh. 7 - Prob. 33QCh. 7 - Recognizing accrued interest expense Abardeen...Ch. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Effect of warranties on income and cash flow To...Ch. 7 - Effect of warranty obligations and payments on...Ch. 7 - Principle due at maturity versus installments...Ch. 7 - Prob. 9ECh. 7 - Amortization of a long-term loan A partial...Ch. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 14ECh. 7 - Exercise 7-15 Straight-line amortization of a bond...Ch. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Prob. 18ECh. 7 - Prob. 19ECh. 7 - Prob. 20ECh. 7 - Prob. 21ECh. 7 - Exercise 7-22 Preparing a classified balance sheet...Ch. 7 - Exercise 7-23 Effective interest amortization of a...Ch. 7 - Prob. 24ECh. 7 - Prob. 25ECh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Problem 7-29 Current liabilities The following...Ch. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Problem 7-32 Accounting for a line of credit Elite...Ch. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Problem 7-35 Straight-line amortization of a bond...Ch. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Writing Assignment Definition of elements of...Ch. 7 - Prob. 5ATC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What is the amount shown as Cash on Mickey Mouse’s December 31, 2019 Statement of Financial position? On June 1, Mickey Mouse Corporation accepted a customer's P10,000, 9 percent, 3-month note. On July 1, the note was discounted at a bank at a rate of 12 percent. How much cash did Mickey Mouse receive from the bank on the discounted note?arrow_forwardKelly Jones and Tami Crawford borrowed $26,000 on a 7-month, 6% note from Gem State Bank to open their business, Pharoah’s Coffee House. The money was borrowed on June 1, 2022, and the note matures January 1, 2023. what is the entry to record the receipt of the funds from the loan? what is the entry to accrue the interest on June 30?arrow_forwardOn August 31, 2018, BetsyTotten borrowed $1,000 from Iowa State Bank. Totten signed a note payable, promising to paythe bank principal plus interest on August 31, 2019. The interest rate on the note is 6%. Theaccounting year of Iowa State Bank ends on June 30, 2019. Journalize Iowa State Bank’s (a)lending money on the note receivable at August 31, 2018, (b) accrual of interest at June 30, 2019,and (c) collection of principal and interest at August 31, 2019, the maturity date of the note.arrow_forward
- Abardeen Corporation borrowed $136,000 from the bank on October 1, 2018. The note had an 7 percent annual rate of interest and matured on March 31, 2019. Interest and principal were paid in cash on the maturity date. Required What amount of cash did Abardeen pay for interest in 2018? What amount of interest expense was recognized on the 2018 income statement? What amount of total liabilities was reported on the December 31, 2018, balance sheet? What total amount of cash was paid to the bank on March 31, 2019, for principal and interest? What amount of interest expense was reported on the 2019 income statement?arrow_forwardOn September 1, 2020, Thunder Company received an P80,000, 12%, 120-day note from a credit customer wishing to extend its repayment period. On October 2, 2020, thirty days after the note was received, Thunder discounted the note at the bank at 14%. How much cash did Thunder Company receive from the bank? *arrow_forwardOn August 1, 2022, Colombo Company's treasurer signed a note promising to pay $120,900 on December 31, 2022. The proceeds of the note were $116,400. Required: a. Calculate the discount rate used by the lender.arrow_forward
- On September 1, 2018, Mills Company borrowed $72000 cash on a one-year note that required Mills to pay 8 percent interest and $72000 principal, both on August 31, 2019. Assuming the note is paid when due in 2019, what is the debit to interest payable when recording the payment of the note?arrow_forwardArvan Patel is a customer of Bank’s Hardware Store. For Mr. Patel’s latest purchase on January 1, 2018, Bank’s Hardware issues a note with a principal amount of $459,505, 14% annual interest rate, and a 24-month maturity date on December 31, 2019. How much cash was received when the note was collected? Round to the nearest whole dollar, no decimal places.arrow_forward1)What are the proceeds of $1,000,000 deposited in a bank on July 10 for 1 month at 1.5%? Take care to apply “money market” rules and use the proper “day count.” 2) What is the present value as of July 11 of $1MM to be paid January 11 2021 at a (discount) rate of 2%? (Same instructions as in #1)arrow_forward
- Gravel Corporation borrowed $250,000 from a bank on January 1, 2019, by signing a10%, six-month note. The journal entry made by Gravel on January 1, 2019, will debita. Interest Expense for $25,000 and credit Interest Payable for $25,000.b. Cash for $225,000 and credit Notes Payable for $225,000.c. Interest Expense for $25,000 and credit Cash for $25,000.d. Cash for $250,000 and credit Notes Payable for $250,000.arrow_forwardKeesha Co. borrows $200,000 cash on November 1, 2018, by signing a 90-day, 9% note with a face value of $200,000 1. On what date does this note mature? 2. & 3. What is the amount of interest expense in 2018 and 2019 from this note? 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2018, and (c) payment of the note at maturity. (Assume no reversing entries are made.) Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Req 4 On what date does this note mature? On what date does this note mature?arrow_forwardMaggie Sharrer Company borrows $88,500 on September 1, 2022, from Sandwich State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31, 2022?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY