module 6.docx - Homework 1 Question 1 0.00666 out of 0.5 points Which of the following are typical events related to debt financing(Select all that

module 6.docx - Homework 1 Question 1 0.00666 out of 0.5...

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Homework 1 Question 1 0.00666 out of 0.5 points Which of the following are typical events related to debt financing? (Select all that apply.) Selected Answers: Repayment of principal at the maturity date Make payments in advance Payment of dividends Answers: Repayment of principal at the maturity date Issue a note Make payments in advance Collect interest on notes receivable Payment of dividends Adjust for interest incurred Response Feedback: See Module 6, LO 1. Although there are many different types of debt financing, the accounting for all debt financing is similar. Entries are recorded when: 1) the principal amount is borrowed, 2) interest is incurred with the passage of time, and 3) the principal and interest are repaid on the maturity date. Question 2 0.5 out of 0.5 points Match each line item with the financial statement on which it would most likely appear. Question Correct Match Selected Match Balance sheet B. Interest Payable B. Interest Payable Income statement A. Interest Expense A. Interest Expense Statement of cash flows C. Interest Paid C. Interest Paid
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All Answer Choices A. Interest Expense B. Interest Payable C. Interest Paid Response Feedback: See Module 6, LO2 Accounting for Notes Payable. Question 3 0.5 out of 0.5 points On August 1, Year 1, Luna Sea Motel, Inc., issued a 9%, 8-month, $10,000 note. Record the August 1, Year 1, journal entry. Questi on Correct Match Selected Match Debit D. Cash $10,000 D. Cash $10,000 Credit A. Notes Payable $10,000 A. Notes Payable $10,000 All Answer Choices A. Notes Payable $10,000 B. Cash $10,800 C. Notes Expense $10,400 D. Cash $10,000 E. Notes Expense $10,000 F. Notes Payable $10,800 G. Interest Payable
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$800 Response Feedback: See Module 6, LO 2 Notes Payable. The company gets cash, debit $10,000 Cash (+A), and gives a promise to pay, credit $10,000 Notes Payable (+L). Interest on Notes Payable is not recorded until the passage of time. Question 4 0.5 out of 0.5 points On September 1, Year 1, Nim Com Soup, Inc., borrowed $34,000 by issuing a 8- month note at 7%. Interest Payable at December 31, Year 1, equals ______ (round to the nearest whole dollar). DO NOT INCLUDE $ IN ANSWER Selected Answer: 793 Correct Answer: 793 ± 1% Response Feedback : See Module 6, LO 2 Notes Payable. The adjusting entry for the interest owed for four month's interest (Sept. - Dec.) equals the Notes Payable x the annual interest rate x 4/12 of a year. Whether the note is a 3-month, 6-month, or any other maturity, the amount of the interest owed will be 4/12 of the annual rate, i.e., the maturity date is not part of the calculation. The maturity date is only used to determine when the note will be paid off and how much interest will be paid in total. Question 5 0.5 out of 0.5 points On August 1, Year 1, Luna Sea Motel, Inc., issued a 9%, 8-month, $10,000 note and a 9%, 10-month, $10,000 note. The interest payable on the 9%, 8-month note will be _____ the interest on the 10-month note as of December 31.
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