00 casha 800000 repaidnotespayable c

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Unformatted text preview: $8,000 .8573 (from Table 4 in Appendix A) Discount on notes payable $ $ Cash (+A) Discount on Notes Payable (–L) 8,000.00 6,858.40 1,141.60 6,858.40 1,141.60 Notes Payable (+L) 8,000.00 Issued notes payable. Interest Expense (E, –SE) 548.67 Discount on Notes Payable (+L) 548.67 Incurred interest. Interest Expense (E, –SE) 592.93 Discount on Notes Payable (+L) 592.93 Incurred interest. E11–6 Concluded Notes Payable (–L) 8,000.00 Cash (–A) 8,000.00 Repaid notes payable. c. Stated interest rate = 6% Face value Present value (i = 8%, n = 2) Present value of face value $8,000 .8573 (from Table 4 in Appendix A) $6,858.40 Present value of interest payments ($8,000 6%) 1.7833 (from Table 5 in Appendix A) 855.98 Total present value 7,714.38 Discount on notes payable 285.62 Cash (+A) Discount on Notes Payable (–L) $8,000.00 $ 7,714.38 285.62 Notes Payable (+L) 8,000.00 Issued notes payable. Interest Expense (E, –SE) 617.15a Discount on Notes Payable (+L) 137.15b Cash (–A) 480.00c Incurred and paid interest. a $617.15 = Book Value Effective Interest Rate = 7,714.38 8% b $137.15 = Interest Expense – Interest Payment c $480.00 = Face Value Stated Interest Rate = $8,000 6% Interest expense (E, –SE) 628.47a Discount on Notes Payable (+L) 148.47b Cash (–A) 480.00 Incurred and paid interest. a $628.47 = Book Value Effective Interest Rate = (7,714.38 + 137.15) 8% b $148.47 = $8,000.00 – [$7,714.38 + $137.15 (from prior entry)] Notes Payable (–L) 8,000 Cash (–A) Repaid notes payable. 8,000 E11–7 a. Present value = Present value of face value + Present value of periodic interest payments (1 ) Discount rate = 8% Present value of face value (i = 8%, n = 2) ($2,500 0.85734 from Table 4 in Appendix A) Present value of periodic interest payments (i = 8%, n = 2) ($200 1.78326 from Table 5 in Appendix A) Total present value (2 ) Discount rate = 10% Present value of face value (i = 10%, n = 2) ($2,500 0.82645 from Table 4 in Appendix A) Present value of periodic interest payments (i = 10%, n = 2) ($200 1.73554 from Table 5 in Appendix A) Total present value (3 ) Discount rate = 12% Present value of face value (i = 12%, n = 2...
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