Question

J C. Calculate the book value of llle D SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters 1 through 9.) SPIO. Recall that Kate previously obtained a $15,000 bank loan, signing a note payable, on November 30 note required semiannual interest payments at the rate of six percent. The entire principal balance due two years from the origination date of the note. Kate has been accruing interest on a monthly hacie in the amount of $75. Kate would like to know how she should record the interest in May, the month she makes the first interest payment. She is unsure how much expense will need to be recorded in May. The upcoming interest payment is really not Kate's main concern right now. She was just notified by a lawyer that she is being sued for copyright infringement. Mega Cards Incorporated, one of the largest greeting card companies, believes that one of Kate's designs is too similar to one of Mega's designs for it to be coincidence, and has, therefore, decided to sue Kate's Cards. Mega has a prior reputation for suing small companies and settling out of court for lesser damages. Kate, however, knows that her design is original and that she had never previously seen the Mega design that is the

Answer 1

Ans. 1

	1
Description	Amoutn in $
Total Loan	15000
Total Interest Rate @ 6% for six month	900
Provision Made @ 75 each month for 6 Month	450
Balance amount need to book	450

Entry should be like below

Description	Dr	Cr
Interest Expense	450
Interest Provision	450
To Bank a/c		900

2. The copyright lawsuit should be shown as contingent liability in financial statement and we can make a provision for the same in balance sheet