Homework Answers
(a)
Prepare schedule as follows:
| BROWN CO. | |||||
| Amortization Schedule | |||||
| Year | Principal balance on January 01 | Cash payments December 31 | Applied to interest | Applied to principal | Principal balance end of period |
| (A) | (B) | [C = A × 7%] | [D = B-C] | [E = A-D] | |
| 2018 | $47,000 | $13,876 | $3,290 | $10,586 | $36,414 |
| 2019 | $36,414 | $13,876 | $2,549 | $11,327 | $25,087 |
| 2020 | $25,087 | $13,876 | $1,756 | $12,120 | $12,967 |
| 2021 | $12,967 | $13,876 | $909 | $12,967 | $0 |
______________________________________________________________________
(c)
Prepare statements as follows:
| BROWN Co. | ||||
| Income statement | ||||
| For the year ended december 31 | ||||
| 2018 | 2019 | 2020 | 2021 | |
| Rental revenue | $23,500 | $23,500 | $23,500 | $23,500 |
| Less: Expenses: | ||||
| Interest expense (see part a) | $3,290 | $2,549 | $1,756 | $909 |
| Net Income | $20,210 | $20,951 | $21,744 | $22,591 |
| BROWN Co. | ||||
| Balance Sheet | ||||
| December 31 | ||||
| 2018 | 2019 | 2020 | 2021 | |
| Assets: | ||||
| Cash | $9,624 | $19,248 | $28,872 | $38,496 |
| Land | $47,000 | $47,000 | $47,000 | $47,000 |
| Total assets | $56,624 | $66,248 | $75,872 | $85,496 |
| Liabilities and owner's equity | ||||
| Note payable | $36,414 | $25,087 | $12,967 | $0 |
| Retained earnings | $20,210 | $41,161 | $62,905 | $85,496 |
| Total Liabilities and owner's equity | $56,624 | $66,248 | $75,872 | $85,496 |
| BROWN Co. | ||||
| Statement of cash flows | ||||
| For the year ended december 31 | ||||
| 2018 | 2019 | 2020 | 2021 | |
| Cash flow from operating activities: | ||||
| Cash collected for rental revenue | $23,500 | $23,500 | $23,500 | $23,500 |
| Cash paid for interest | ($3,290) | ($2,549) | ($1,756) | ($909) |
| Net cash provided (used) by operating activities | $20,210 | $20,951 | $21,744 | $22,591 |
| Cash flow from investing activities: | ||||
| Purchase of land | ($47,000) | - | - | - |
| Net cash provided (used) by investing activities | ($47,000) | - | - | - |
| Cash flow from financing activities: | ||||
| Borrowing on notes payable | $47,000 | - | - | - |
| Repayment of borrowings | ($10,586) | ($11,327) | ($12,120) | ($12,967) |
| Net cash provided (used) by financing activities | $36,414 | ($11,327) | ($12,120) | ($12,967) |
| Net increase (decrease) in cash | $9,624 | $9,624 | $9,624 | $9,624 |
| Beginning cash balance | 0 | $9,624 | $19,248 | $28,872 |
| Ending cash balance | $9,624 | $19,248 | $28,872 | $38,496 |
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Required information The following information applies to the questions displayed below. On January 1, 2018, Brown...
Required information (The following information applies to the questions displayed below.] On January 1, 2018, Brown...
Required information (The following information applies to the questions displayed below.] On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $80,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $23,087 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $42.400...
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Required information (The following information applies to the questions displayed below.) On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,500 face value, four-year term note that had an 7 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,547 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $20,825...
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[The following information applies to the questions displayed below.) On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $80,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $23,087 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $42,400 cash per...
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Required information [The following information applies to the questions displayed below.] On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $70,000 face value, four-year term note that had an 4 percent annual interest rate. The note is to be repaid by making annual cash payments of $19,284 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $34,300...
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The following information applies to the questions displayed below.) On January 1, 2018, Brown Co. borrowed...
The following information applies to the questions displayed below.) On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $80,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $23,087 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $42,400 cash per...
On January 1, 2018, brown co. borrowed cash from First Bank by issuing 49,500 for face...
On January 1, 2018, brown co. borrowed cash from First Bank by
issuing 49,500 for face value,
four-year term note that had an 8 percent annual interest rate.
The note is to be repaid by making annual cash payments of $14,285
that include both interest and principal on December 31 of each
year. Brown used the proceeds from the loan to purchase land that
generated rental revenues of $22,275 cash per year.
A. Prepare an amortization schedule for the four-year...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $49,500 face...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $49,500 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $14,285 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $22,275 cash per year. BROWN CO. Balance Sheet As of December 31...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,121 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $22,260 cash per year. Organize the information in accounts under an accounting...
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Required information [The following information applies to the questions displayed below.) The following post-closing trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31 2017 $ $ Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock Retained earnings 5,710 17,410 1,640 24,760 7,695 21,200 17,345 Transactions for 2018 1. Acquired an additional $10,400 cash from the issue of common stock 2 Purchased $61,400 of inventory on account. 3. Sold Inventory that...
Required information (The following information applies to the questions displayed below.] On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $80,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $23,087 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $42.400...
Required information (The following information applies to the questions displayed below.) On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,500 face value, four-year term note that had an 7 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,547 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $20,825...
[The following information applies to the questions displayed below.) On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $80,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $23,087 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $42,400 cash per...
Required information [The following information applies to the questions displayed below.] On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $70,000 face value, four-year term note that had an 4 percent annual interest rate. The note is to be repaid by making annual cash payments of $19,284 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $34,300...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $52,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $15,007 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $24,960 cash per year. Required a. Prepare an amortization schedule for the...
The following information applies to the questions displayed below.) On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $80,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $23,087 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $42,400 cash per...
On January 1, 2018, brown co. borrowed cash from First Bank by
issuing 49,500 for face value,
four-year term note that had an 8 percent annual interest rate.
The note is to be repaid by making annual cash payments of $14,285
that include both interest and principal on December 31 of each
year. Brown used the proceeds from the loan to purchase land that
generated rental revenues of $22,275 cash per year.
A. Prepare an amortization schedule for the four-year...
Required information [The following information applies to the questions displayed below.) The following post-closing trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31 2017 $ $ Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock Retained earnings 5,710 17,410 1,640 24,760 7,695 21,200 17,345 Transactions for 2018 1. Acquired an additional $10,400 cash from the issue of common stock 2 Purchased $61,400 of inventory on account. 3. Sold Inventory that...
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