Chapter 13 - Test Bank 171 - 1 Hot Springs Marine Cash...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1. Hot Springs Marine Cash .................................................................................... 20.000.000 Notes payable ............................................................................ 20,000,000 Third Bank Notes receivable ............................................................................... 20,000,000 Cash .......................................................................................... 20,000,000 2. Adjusting entries (December 31, 2013) Hot Springs Marine Interest expense ($20,000,000 x 9% x 1/ 12) ................................... 150,000 Interest payable ......................................................................... 150,000 Third Bank Interest receivable .............................................................................. 150,000 Interest revenue ($20,000,000 x 9% x 1112) ........................... 150,000 Maturity (March 31, 2014) Hot Springs Marine Interest expense ($20,000,000 x 9% x 3f 12) ................................... 450,000 Interest payable (from adjusting entry) ............................................ 150,000 Notes payable (face amount) ............................................................ 20,000,000 Cash (total) ................................................................................ 20,600,000 Third Bank Cash (total) ......................................................................................... 20,600,000 Interest revenue ($20,000,000 x 9% x 3112) ........................... 450,000 Interest receivable (from adjusting entry) ............................... 150,000 Notes receivable (face amount) _______________________________________________ 20,000,000 3. Issuance of note (December 1, 2013) Cash (difference) ............................................................................... 19,400,000 Discount on notes payable ($20,000,000 x 9% x 4112) .................. 600,000 Notes payable (face amount) .................................................... 20,000,000 Adjusting entry (December 31, 2013) Interest expense ($20,000,000 x 9% x 1f 12) ................................... 150,000 Discount on notes payable ........................................................ 150,000 Maturity (March 31, 2014) Interest expense ($20,000,000 x 9% x 3f 12) ................................... 450,000 Discount on notes payable ........................................................ 450.000 Notes payable (face amount) ............................................................ 20,000,000 Cash .................................................................................... 20,000,000 Effective interest rate: Discount ($20,000,000 x 9% x 4/12) $ 600,000 Cash proceeds + $19,400,000 Interest rate for 4 months’ 3. 092 78% x 12131 Annual effective rate 9.28% ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern