Florenda Quino Forwarders borrowed P600,000 from the bank on Sept. 1, 2019. The note carried an 8% annual rate of interest and was set to mature on Feb. 29, 2020.Interest and principal were paid in cash on the maturity date.Required:1. What was the amount of interest expense paid in cash in 2019?2. What was the amount of interest expense recognized on the 2019 income statement?3. What was the amount of total liabilities shown on the 2019 balance sheet?4. What was the total amount of cash that was paid to the bank on Feb. 29, 2020 for principal and interest?5. What was the amount of interest expense shown on the 2020 income statement?

Solution: The interest rate is missing, so I looked for similar questions and found that it is 8%:…

Florenda Quino Forwarders borrowed P600,000 from the bank on Sept. 1, 2019. The note carried an 8% annual rate of interest and was set to mature on Feb. 29, 2020. Interest and principal were paid in cash on the maturity date.

Florenda Quino Forwarders borrowed P600,000 from the bank on Sept. 1, 2019. The note carried an 8% annual rate of interest and was set to mature on Feb. 29, 2020. Interest and principal were paid in cash on the maturity date.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 1PA: On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10%...

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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

Florenda Quino Forwarders borrowed P600,000 from the bank on Sept. 1, 2019. The note carried an 8% annual rate of interest and was set to mature on Feb. 29, 2020.
Interest and principal were paid in cash on the maturity date.
Required:
1. What was the amount of interest expense paid in cash in 2019?
2. What was the amount of interest expense recognized on the 2019 income statement?
3. What was the amount of total liabilities shown on the 2019 balance sheet?
4. What was the total amount of cash that was paid to the bank on Feb. 29, 2020 for principal and interest?
5. What was the amount of interest expense shown on the 2020 income statement?

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