Answered: Airline Accessories obtains a $100,000,…

Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly payments of $3,042. What amount would be recorded as interest expense in the second month?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 21MC: A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an...

See similar textbooks

Related questions

Q: If the finance charge on a loan made by Marjorie Young is $1,950 and the loan is to be paid in 24…

A: A loan amount represents the amount borrowed at a fixed interest rate to be repaid over a fixed…

Q: An automobile loan of $15,000 at 12% APR compounded monthly for 36 months requires equal monthly…

A: Repayment of loan is made in installments of fixed amount which include interest as well as portion…

Q: Lenagar Lumber Inc. is making monthly payments of $572.39 and paying nominal 9% interest on a…

A: A loan amortization table is a schedule of loan payments with bifurcation of interest paid in…

Q: A building is priced at $100,000. If a downpayment of $30,000 is made, an a payment of $1,000 every…

A: The number of months required to pay the amount can be calculated with the help of NPER function of…

Q: A company plans to purchase a new piece of equipment in 36 months. If $3105 is deposited into a…

A: Future value of a present value is the value of that amount after taking into account the time value…

Q: A car is purchased with a 48-month, 9% nominal loan with an initial balance of $15,000. What is the…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: he company will pay $2,000 per month to repay the loan. The bank will charge .75% est per month on…

A: In this we have to calculate present value FACTOR and from that we can get months required.

Q: Imagine the company that you work for borrows $8,000,000 at 8% interest, and the loan is to be paid…

A: The loan borrowed would be given, with the interest amount. The interest should be paid on the given…

Q: Your company has been offered credit terms on its purchases of 4/30, net 90 days. What will be the…

A: The an agreement to purchase products and/or services on credit rather than making immediate cash or…

Q: A $10,000 loan is scheduled to be repaid in equal monthly installments at the end of each month for…

A: Principal Amount = $10,000 Interest Amount = $2,600 Time Period = 36 months

Q: WSS Plumbing wishes to pay off a debt of P310,000 in 3 years. What regular payment would they need…

A: Debt amount (PV) = P310,000 Period = 3 years Number of quarterly payments (n) = 3*4 = 12 Interest…

Q: XYZ Company has taken out a 5-years instalment loan of AED 100,000 at a nominal interest equal rate…

A: Given: Loan amount in AED 100,000 Nominal interest rate 12% Loan tenure in years 5 Payment…

Q: BALR Corp.borrows $600,000 to be paid off in three years. The loan payments are semiannual with the…

A: Loan payments are semiannual. Thus, the semiannual interest rate should be considered i.e. 6%/2=3%.…

Q: A company borrowed at 7.21% compounded annually to purchase equipment, agreeing to make payments of…

A: Time values tell that money received today is of more worth than that of receiving the exact amount…

Q: On April 3, the Mears Flag Company borrowed $15,000 to pay for start-up costs for its new showroom.…

A: Simple interest means that an account holder will only gain interest on the principal and the…

Q: On March 1, Minnerly Motors obtains a business loan from a local bank. Theloan is a $25,000…

A: The formula to compute interest charge as follows:

Q: Automotive Excellence Inc. borrowed $18,000.00 on june 21 with an interest rate of 8.9% per annum.…

Q: Lush Gardens Co. bought a new truck for $50,000. It paid $5,500 of this amount as a down payment and…

A: Present Value of Ordinary Annuity refers to a concept that determines the value of cash flows at…

Q: company makes payments of $1,600 at the end of every month, how long will it take to settle the…

A: Loan: It is the amount of credit taken by the borrower for a period from the lender. The lender…

Q: A car dealer advertises the sale of a car model for a cash price of P 280,000. If purchased on…

A: Formula to Calculate Monthly Payments Monthly Payments = (P X R/12) X [(1 +R/12)^N)/ [(1+R/12)^N -1]…

Q: A company borrowed P45,200 from a savings and loan association that charges 14% converted quarterly.…

A: Let us make an amortization table to solve the question. Please note the formula used to calculate…

Q: Kiara obtained a loan of $22,500 at 6% compounded quarterly. How long (rounded up to the next…

A: A loan is a sort of debt that is taken on by an individual or another institution. The lender, which…

Q: Merchandise is received for $25,000 now and $50,000 in 6 months. If $10,000 is paid within a month,…

A: Honor code: Since you have asked multiple questions, we will solve the first question for you. If…

Q: Marpole Carpet Cleaning borrowed $7600 from Richmond Credit Union at 8% compounded quarterly. The…

A: Borrowed Amount = $7600 Rate of Interest(r) = 8% Compunded Quarterly =…

Q: A gasoline engine is available on instalment basis with a down payment of P 12,423 and P 5,532 at…

A: The cash price can be computed as the sum of down payment and present value of the loan.

Q: MMS Corp borrows $1,650,000 today for a new building. The loan is an equal principal payment loan…

A: Calculation of Interest Payment due in Month 16:The interest payment due in month 16 is…

Q: A $10,000 loan is scheduled to be repaid in equal monthly installments at the end of each month for…

A: To Find: Additional Interest paid

Q: A company borrowed at 7 42% compounded monthly to purchase equipment, agreeing to make payments of…

A: Given, The rate of interest is 7.42% compounded monthly. Quarterly payments is $2900 Term is 17…

Q: you are taking a $100,000 mortgage loan for your business to be repaid over 5 years in equal…

A: Mortgage loan is the loan which is given by keeping something as collateral. This loan is for…

Q: pan of $30,000 is to be financed over a period of 24 months. The agency quotes a nominal interest…

A: in this we have to find equivalent effective interest rate and use as annual interest rate.

Q: Frank's Machine Shop purchased a computer to use in tuning encines. To finance the purchase, the…

A: The loan borrowed from a lender can be repaid in regular equal payments. These regular payments…

Q: Analysts at Sky West Airlines did a 3 year projection of expenses. They calculated that the company…

A: Semi annual cost (C) = $ 15200 Interest rate = 4% Semi annual interest rate (r) = 4%/2 = 2% Period =…

Q: months. What is t

A: The outstanding principle after the 10th payment can be calculated as follows :

Q: A firm purchased heavy cable and 4 inch conduit on credit and agreed to pay 10% interest rate per…

A: Given Purchase made in Oct = $756.80 Purchase made in Dec = $1,325.25 I

Q: A business borrowed $50,000 at 8% compounded monthly. If the loan is to be paid in equal quarterly…

A: In this problem, the number of payment period and compounding is not the same, hence, we will first…

Q: A loan of $22,000 is to be financed to assist a person's college education. Based upon monthly…

A: Nominal interest rate refers to the interest rate before taking inflation into account. Nominal can…

Q: MMS Corp borrows $1,650,000 today for a new building. The loan is an equal principal payment loan…

A: Calculation of Current Portion of Debt in Month 16:The current portion of month debt 16 is…

Q: Olfert Inc. is repaying a loan of $57500 by making payments of $4250 at the end of every six months…

A: Loan repayments in equal instalments at equal intervals of time is called an annuity. Initial…

Q: General Computers Inc. purchased a computer server by taking a loan of $35,000 at 4.50% compounded…

A: Amortization table is as follows-

Q: Company makes payments of $1,800 at the end of every month, how long will it take to settle the…

A: Mortgage: It represents the loan or credit taken by the borrower for the purpose of purchasing a…

Q: A design studio received a loan of $8,950 at 5.60% compounded semi-annually to purchase a camera. If…

A: Amount of loan is $8,950 Interest rate is 5.6% compounded semi-annually Time period is 2 years Total…

Q: To pay for remodeling, the company will take out a $500,000 five-year loan at 9.5% interest,…

A: Given data: Original Loan=$500,000 Annual Interest Rate=9.5% Loan duration (yrs)=5 Number of periods…

Q: BALR Corp.borrows $500,000 to be paid off in three years. The loan payments are semiannual with the…

A: Loan refers to the amount raised by an individual with the mode of borrowings from the lender with…

Q: B11 through E30. Column B contains the interest payment for each quarter, and column C contains the…

A: An amortization schedule (also known as an amortisation table) is a table that outlines each…

Q: TNT Construction borrowed $150,000 at 7.26% compounded annually and signed a contract with the…

A: Solution:- When an amount is borrowed, the borrower has the option whether to repay it in lump sum…

Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly payments of $3,042. What amount would be recorded as interest expense in the second month?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Sub-Cinema Inc. borrowed $10,000 on Jan. 1 and will repay the loan with 12 equal payments made at the end of the month for 12 months. The interest rate is 12% annually. If the monthly payments are $888.49, what is the journal entry to record the cash received on Jan. 1 and the first payment made on Jan. 31?
Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in three months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on February 24, and the entry for payment of the short-term note and final interest payment on April 24. Round to the nearest cent if required.
Cost of Bank Loan On March 1, Minnerly Motors obtains a business loan from a local bank. The loan is a 25,000 interest-only loan with a nominal rate of 11%. Interest is calculated on a simple interest basis with a 365-day year. What is Minnerlys interest charge for the first month (assuming 31 days in the month)?
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 8.5%. Each year on December 31, the company pays down the principal balance by $80,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase, and 5% in the second month following the purchase. What are the cash payments if it made the following purchases in 2018?
McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
Everglades Consultants takes out a loan in the amount of $375,000 on April 1. The terms of the loan include a repayment of principal in eight, equal installments, paid annually from the April 1 date. The annual interest rate on the loan is 5%, recognized on December 31. (Round answers to the nearest cent, if needed.) A. Compute the interest recognized as of December 31 in year 1. B. Compute the principal due in year 1.
On January 1, a flower shop contracts with customers to provide flowers for their wedding on June 2. The total contract price is $3,000, payable in equal installments for the next six months on the first of each month (with the first payment due January 1). How much will be recorded as revenue during the month of April?
A companys sales for January are $250,000. If the company projects warranty obligations to be 5% of sales, what is the warranty liability amount for January?