Homework Answers
Question 3:
The amount of premium on notes payable always has a credit balance. Interest expense always has a debit balance. Premium on notes payable is reduced by debiting at the time of interest payment. Debiting the premium on bonds payable reduces the interest expense.
Cash payment will be greater than interest expense.
1st option.
Question 4:
In a debt covenant a number of conditions are set by the creditor to the debtor in the form of financial ratio to be maintained by the debtor. Such financial ratio to be maintained by the debtor serves to give assurance to a creditor that the debtor will have the ability to pay interest and principal at maturity.
1st option.
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If an interest-bearing note payable is issued at a premium, then the contractual cash payment for...
If interest expense is less than the contractual interest payment, then A. the note was issued...
If interest expense is less than the contractual interest payment, then A. the note was issued at a premium. B. the note was issued at a discount. C. the note was issued at par. D. the company should refinance the note to get a better interest rate.
36. If bonds are issued initially at a premium and the effective-interest method of amortization is...
36. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be A) greater than if the straight-line method were used. B) greater than the amount of the interest payments. C) the same as if the straight-line method were used. D) less than if the straight-line method were used. 37. Stockholders' equity is generally classified into two major categories: A) contributed capital and appropriated capital. B) appropriated...
Classifying Debt On December 31, 2020, Millers Grocery Inc. had a 10 year, 7 note payable...
Classifying Debt On December 31, 2020, Millers Grocery Inc. had a 10 year, 7 note payable balance of $100,000. The note payable was originally issued on June 30, 2011. The company will issue its financial statements on March 15, 2021 How will the note payable in each of the following separate scenarios be classifed on the balance sheet of Millers Grocery on December 31, 20207 a. The company intends to pay off the note payable when it comes due b....
QS 9-4 Interest-bearing note transactions LO P1 On November 7, 2018, Mura Company borrows $270,000 cash...
QS 9-4 Interest-bearing note transactions LO P1 On November 7, 2018, Mura Company borrows $270,000 cash by signing a 90-day, 7% note payable with a face value of $270,000. 1. Compute the accrued interest payable on December 31, 2018 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31, 2018 and payment of the note at maturity. Complete this question by entering your answers in the tabs below Reg 1 Req 2 and 3...
Exercise 9-4 Interest-bearing notes payable with year-end adjustments LO P1 Keesha Co. borrows $195,000 cash on...
Exercise 9-4 Interest-bearing notes payable with year-end adjustments LO P1 Keesha Co. borrows $195,000 cash on November 1 of the current year by signing a 150-day, 8%, $195,000 note. 1. On what date does this note mature? 2. & 3. What is the amount of interest expense in the current year and the following year from this note? 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest on December 31, and (c) payment of...
Trying to figure out interest expense and premium on bonds payable :) Instructions Campbell Inc. produces...
Trying to figure out interest expense and premium on bonds
payable :)
Instructions Campbell Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $11,300,000 of 10-year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of $12,769,867. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the...
QS 9-4 Interest-bearing note transactions LO P1 On November 7, Mura Company borrows $370,000 cash by...
QS 9-4 Interest-bearing note transactions LO P1 On November 7, Mura Company borrows $370,000 cash by signing a 90-day, 8%, $370,000 note payable 1. Compute the accrued interest payable on December 31 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 and 3 Compute the accrued interest payable...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will:...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known...
QS 9-4 Interest-bearing note transactions LO P1 On November 7, Mura Company borrows $330,000 cash by...
QS 9-4 Interest-bearing note transactions LO P1 On November 7, Mura Company borrows $330,000 cash by signing a 90-day, 5%, $330,000 note payable. 1. Compute the accrued interest payable on December 31. 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Reg 1 Reg and 3 Compute the accrued interest payable on...
DeShone Kizer Incorporated issued $200,000, 9% annual interest rate, 5-year bonds payable on January 1, 2018....
DeShone Kizer Incorporated issued $200,000, 9% annual interest rate, 5-year bonds payable on January 1, 2018. The market rate of interest on similar debt instruments was greater than 9% on the date of issuance, so the selling price of the bonds payable was 97 (97% of face value). Interest is paid semiannually on every July1 and January 1. Kizer Inc. maintains their accounting records on a calendar year ending December 31. The journal entry for the payment of interest on...
36. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be A) greater than if the straight-line method were used. B) greater than the amount of the interest payments. C) the same as if the straight-line method were used. D) less than if the straight-line method were used. 37. Stockholders' equity is generally classified into two major categories: A) contributed capital and appropriated capital. B) appropriated...
Classifying Debt On December 31, 2020, Millers Grocery Inc. had a 10 year, 7 note payable balance of $100,000. The note payable was originally issued on June 30, 2011. The company will issue its financial statements on March 15, 2021 How will the note payable in each of the following separate scenarios be classifed on the balance sheet of Millers Grocery on December 31, 20207 a. The company intends to pay off the note payable when it comes due b....
QS 9-4 Interest-bearing note transactions LO P1 On November 7, 2018, Mura Company borrows $270,000 cash by signing a 90-day, 7% note payable with a face value of $270,000. 1. Compute the accrued interest payable on December 31, 2018 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31, 2018 and payment of the note at maturity. Complete this question by entering your answers in the tabs below Reg 1 Req 2 and 3...
Exercise 9-4 Interest-bearing notes payable with year-end adjustments LO P1 Keesha Co. borrows $195,000 cash on November 1 of the current year by signing a 150-day, 8%, $195,000 note. 1. On what date does this note mature? 2. & 3. What is the amount of interest expense in the current year and the following year from this note? 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest on December 31, and (c) payment of...
Trying to figure out interest expense and premium on bonds
payable :)
Instructions Campbell Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $11,300,000 of 10-year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of $12,769,867. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the...
QS 9-4 Interest-bearing note transactions LO P1 On November 7, Mura Company borrows $370,000 cash by signing a 90-day, 8%, $370,000 note payable 1. Compute the accrued interest payable on December 31 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 and 3 Compute the accrued interest payable...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known...
QS 9-4 Interest-bearing note transactions LO P1 On November 7, Mura Company borrows $330,000 cash by signing a 90-day, 5%, $330,000 note payable. 1. Compute the accrued interest payable on December 31. 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31 and payment of the note at maturity on February 5. Complete this question by entering your answers in the tabs below. Reg 1 Reg and 3 Compute the accrued interest payable on...
DeShone Kizer Incorporated issued $200,000, 9% annual interest rate, 5-year bonds payable on January 1, 2018. The market rate of interest on similar debt instruments was greater than 9% on the date of issuance, so the selling price of the bonds payable was 97 (97% of face value). Interest is paid semiannually on every July1 and January 1. Kizer Inc. maintains their accounting records on a calendar year ending December 31. The journal entry for the payment of interest on...
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