2.20(additional)

2.20(additional) - Interest Payable = $2,700 Notes Payable...

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Review Last Class 2005 March 1: Purchase CD: $60,000 One year, 6% annual interest CD 60,000 Cash 60,000 December 31: No cash inflow. Interest earned for 10 months: $60,000 x .06 x 10/12 = $3,000 Interest Receivable 3,000 Interest Revenue 3,000 2006 March 1: Redeem CD and receive cash: Principal: $60,000 Interest: 60,000 x .06 = 3,600 $63,600 Cash 60,000 CD 60,000 Cash 3,600 Interest Receivable 3,000 Interest Revenue 600 (Interest earned for 2 months : &60,000 x .06 x 2/12 = $600)
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Financial Statements 2005 Balance Sheet Short-term Assets Interest Receivable $3,000 CD $60,000 Income Statement Interest Revenue $3,000 Statement of Cash Flows Investing Activity Purchase CD ($60,000) 2006 Balance Sheet Income Statement Interest Revenue $600 Statement of Cash Flows Operating Activity Interest received $3.600 Investing Activity Redeem CD $60,000
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2006 Financial Statements Balance Sheet: Short-Term Liability:
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Unformatted text preview: Interest Payable = $2,700 Notes Payable = $90,000 Income Statement: Interest Expense = $2,700 Statement of Cash Flow: $90,000 Financing Activity 2007 Financial Statements Balance Sheet: Nothing Cash, interest payable & notes payable changed Income Statement: Interest Expense = $5,400 Statement of Cash Flow: ($90,000) Financing Activity ($8,100) Operating Activity Financial Statements 2006 Balance Sheet Short-term Liability Interest Payable $2,700 Note Payable $90,000 Income Statement Interest Expense $2,700 Statement of Cash Flows Financing Activity Cash from Loan $90,000 2007 Balance Sheet Income Statement Interest Expense $5,400 Statement of Cash Flows Operating Activity Interest paid ($8,100) Financing Activity Repay note ($90,000)...
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2.20(additional) - Interest Payable = $2,700 Notes Payable...

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