Question

I need to solve for 1 and 2 please

Vineyard Corporation began 2014 owing notes payable of $4.7 million. During 2014 Vineyard borrowed $1.9 million on notes payable and paid off $1.6 million of notes payable from prior years. Interest expense for the year was $1.2 million, including $0.4 million of interest payable accrued at December 31, 2014. Show what Vineyard should report for these facts on the following financial statements (Enter all amounts in millions.): 1. Income statement for 2014 a. Interest expense 2. Balance sheet as of December 31, 2014 a. Notes payable b. Interest payable 1. Show what Vineyard should report for these facts on the income statement. Accounts (In millions) a. Interest expense Enter any number in the edit fields and then click Check Answer.

Answer 1

Solution 1:

a. Interest expense (on Income statement of 2014) = $1.2 million

Solution 2:

a. Notes payable (On the balance sheet as of 31 Dec 2014) = Notes payable in the beginning of 2014 + Additional notes payable issued during 2014 - Notes payable repaid during 2014

= 4.7 + 1.9 - 1.6

= $5.0 millions

b. Interest payable (on the balance sheet as of 31 Dec 2014) = $0.4 million