Problems For Intermediate Accounting 2, due today

Problems For Intermediate Accounting 2, due today - Chapter...

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Chapter 9 P9-2) 1. a. Cash Received: (1)Interest-bearing: $60,000 (2)Noninterest-bearing:$60,000 x 0.88=$52,800 b. Effective interest rate: (1)Interest-bearing: 12% (2)Noninterest-bearing: $7,200 = 13.64% $52,800 c. Interest expense for 2016: (1)Interest-bearing: $60,000 x 0.12 x 2 =$1,200 12 (2)Noninterest-bearing: $7,200 x 2 12 =$1,200 2.The journal entry for Edwin Inc. Bearing and Non- interest bearing notes payable: Journal entries for Interest Bearing(November 2016): Date Account Title & Expl: Debit Credit 2016 Nov Cash 60,000 Notes Payable 60,000 (Being notes payable issued for money borrowed) Journal entry for Non-interest Bearing(Nov 2016): Date Account Title & Expl: Debit Credit 2016 Nov Cash 52,800 Discount on notes 7,200 payable
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NotesPayable 60,000 (Being notes payable issued for money borrowed) Journal entries for Interest Bearing (Dec, 2016): Date Account Title & Expl: Debit Credit 2016 Dec Interest Expense 1,200 Interest Payable 1,200 (Being interest paid) Journal entries for Non-interest Bearing (Dec, 2016): Date Account Title & Expl: Debit Credit 2016 Dec Interest Expense 1,200 Discount on Notes Payable 1,200 (Being interest paid) Journal entries for Interest Bearing (Oct, 2017): Date Account Title & Expl: Debit Credit Dec 2017 Interest Expense 6,000 Interest Payable 1,200 Cash 7,200 (Recording the Interest Expense) Journal entries for Non-interest Bearing (Oct, 2017): Date Account Title & Expl: Debit Credit 2017 Dec Interest Expense 6,000
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Discount on Note Payable 6,000 (Being interest paid) 3.The effective rate is higher for the non-interest bearing note since there is no interest, which is paid on these bonds and no general rate can be established which is prevalent in the market. Also since the investor is supposed to get the amount at the end of the tenure, there is that risk as well as the deterioration in the time value of money. P9-5) 1. Balance Sheet : The balance sheet is a statement of the financial position. It is one of the main reports in the financial statements. The partial balance sheet for Atwood showing the $8 million short-term debt Current Liabilities Amount $ Notes Payable $2,000,000 Long-Term Liabilities Notes payable (expected to be refinanced in 2016) $6,000,000 2. Justifications:-The short term debt is Callable: When the short term debt is callable in nature that is: the owner of the debt instrument and can be liquidated at any time with its security. -Balance sheet adjustment: when the short term debt taken has to be paid in that financial year then it is recorded as a short term liability.
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P9-6) The Journal Entry For NMC: Date Account Title & Expl: Debit Credit Jan-01 Machinery 72,597.90 Discount on Notes Payable 7,402.10 Notes Payabl e 80,000.00 Mar-31
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