Course Hero Logo

On january1 year 1 parke company borrowed 360000 from

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 2 - 4 out of 39 pages.

14.On January 1, year 1, Parke Company borrowed $360,000from a major customer evidenced by a noninterest-bearingnote due in three years. Parke agreed to supply the customer’sinventory needs for the loan period at lower than fair value. Atthe 12% imputed interest rate for this type of loan, the presentvalue of the note is $255,000 at January 1, year 1. Whatamount of interest expense should be included in Parke’s year1 income statement?a. $43,200b. $35,000c. $30,600d. $0
15.Pie Co. uses the installment sales method to recognizerevenue. Customers pay the installment notes in twenty-fourequal monthly amounts, which include 12% interest. What is aninstallment note’s receivable balance six months after the sale?
16.On July 1, year 1, a company obtained a two-year 8%note receivable for services rendered. At that time the marketrate of interest was 10%. The face amount of the note andthe entire amount of the interest are due on June 30, year 3.Interest receivable at December 31, year 1, was
Module 13: Present Value409c. 5% of the July 1, year 1, present value of the amountdue June 30, year 3.d. 4% of the July 1, year 1, present value of the amountdue June 30, year 3.
17.Which of the following is reported as interest expense?a. Pension cost interest.b. Postretirement health-care benefits interest.
c. Imputed interest on noninterest-bearing note.d. Interest incurred to finance construction of machineryfor own use.
18.Norton Corp. does not elect the fair value option forrecording its financial liabilities. The discount resulting fromthe determination of a note payable’s present value should bereported on its balance sheet as a(n)

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 39 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
MCAFEE

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture