To finance the purchase of the machine by issuing $6 million, six-year, zero interest-bearing note to the seller on 1 July 2019. The expected interest rate for the note is 5.5%. The company is expected to pay off the note in six $1 million instalments, at every financial year end. The company employs effective interest method. Assume financial year ends December. Calculate the instalment and interest.

Q: Prepare the journal entry at the end of the second year to record the payment and interest. (Round…

A: Solution:- Preparation of journal entry at the end of the second year to record the payment and…

Q: On January 1, 2020, Aggie Company purchased a building for $65,000, making a cash down payment of…

A: Interest Expenses:- It is an amount which one pays over the principal amount of loan or mortgage…

Q: Magenta Company purchased a machine from Pink Corporation on October 31, 2021. In payment for the…

A:

Q: On July 1, 2019, Lp Manufacturing Co. issued a five-year note payable with a face amount of P250,000…

A: The current liabilities section would include the maturity payment of $50000 and the interest…

Q: On December 31, 2019, Bart Company purchased a machine in exchange for a noninterest bearing note…

A: Note payable is the amount of loan or debt that is borrowed by the business, on which regular…

Q: On January 1, 2019, Northern Manufacturing Company bought a piece of equipment by signing a…

A: Fair value of equipment = Present value of installments       Quarterly installments $20,000.00…

Q: On October 1, 2020, Kingbird Equipment Company sold a pecan-harvesting machine to Valco Brothers…

A: Interest is paid on October, so From Oct 1 to Dec 31 = 3 months. Annual Interest = 169,200*8% =…

Q: On January 1, 2022, De Vera Company loaned Dagpin Company amounting to P2,000,000 and received a…

A: The usage rate is known as the effective interest rate that is actually paid by the borrower of the…

Q: Company is to make an annual principal payment of P600,000 for 5 years plus interest at 8%. The…

A: Impairment=Carrying value of loan-present value of cash flows

Q: On September 1, 2021, Middleton Corp. lends cash and accepts a $5,000 note receivable that offers…

A: Interest = Principal x rate of interest x no. of months / 12 months

Q: To finance the purchase of the machine by issuing RM5 million, six-year, zero interest-bearing note…

A:

Q: Wildhorse Co. issued a five-year interest-bearing note payable for $324000 on January 1, 2019. Each…

A: Balance sheet is the financial statement which involves the total debt, liabilities, assets and…

Q: On December 31, 2020, Chase Bank has a 5-year loan renewable with a face value of $5,000,000 dated…

A: 5 year Loan               = $5000000 Accrued Interests       =   $500000 Total receivable…

Q: On December 31, 2019, Bart Company purchased a machine in exchange for a noninterest bearing note…

A: Note: Since you have posted a question with multiple sub-parts, we will solve first three subparts…

Q: On February 1, 2021, Stealth Trucks sold a diesel rig to Kansas Transports for $250,000, receiving a…

A: Journal is a place where accounting transactions are listed in the book keeping system before ledger…

Q: Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal…

A: Under Accrual Basis of accounting business transations are recorded as and when they occur. Here…

Q: On January 1, 2020, Glucose Company, a calendar-year firm, extended a loan to Gyoza Enterprises…

A: CARRYING VALUE IS AN ACCOUNTING MEASURE OF VALUE IN WHICH THE VALUE OF AN ASSET OR COMPANY IS BASED…

Q: On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for…

A: Fair Value of Bonds = Present Value of Future Cash flows relating to bond @ market rate

Q: On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for…

A: A note payable is indeed a promissory note that has been drafted. A borrower borrows a particular…

Q: On January 1, 2020, Aggie Company purchased a building for $65,000, making a cash down payment of…

A: Given, Cost of building = $65000 Cash down payment = $5000 Notes Payable = $65000-$5000=$60000…

Q: On January 1, 2019, Zoom Bank provided a loan of P4,000,000 to D Company. Under the loan agreement,…

A: An impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit…

Q: Prepare the journal entry at the end of the first year to record the payment and interest, assuming…

A: When asset is purchased against the non interest bearing note then purchase needs to record at the…

Q: Cucina Corporation signed a new installment note on January 1, 2021, and deposited the proceeds of…

A: The process of recording business transactions in the books of accounts for the first time is…

Q: On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for…

A: Total Amount of Notes Payable, including Accrued Interest - P7,253,656

Q: On January 1, 2019, Northern Manufacturing Company bought a piece of equipment by signing a…

A: Notes payable are long-term commitments that indicate the amount of money owing by a company to its…

Q: The Moustache Company is replacing most of the windows in its Alden factory by purchasing them under…

A: Interest expense for 2019 = face value of notes x rate of interest x period = $37,908,000 x 10% =…

Q: To finance the purchase of the machine by issuing RM6 million, six-year, zero interest-bearing note…

A:

Q: On October 1, 2021, Chrysanthemum Co. purchased equipment by issuing a four-year, 9% promissory note…

A: Lets understand the basics. When any asset is purchase against notes payable then asset needs to be…

Q: Rashford Inc. financed the purchase of equipment costing $480000 on April 1, 2022, by making a down…

A: Equated monthly instalment: It is fixed payment amount paid  to a lender  by a borrower to  at a…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Given information, Sales in 2019 =7,500 units Selling price =P 5,000 Warranty cost per percentage =…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: The balance sheet or the statement of financial position shows the financial position of the company…

Q: current liabilities section

A: The first annual payment of P200,000 is made on June 30, 2020. The balance of note payable will be…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Warranty means where the company is undertaking to make good the loss which has been incurred due to…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Liability for warranty is calculated as a percentage of the estimated amount of sales to be made by…

Q: Maris Banking Corporation granted a loan to a borrower on January 1, 2020. The interest rate on the…

A: Introduction:- The following basic information as follows:- Loan receivables are balance that is…

Q: Flipco signed a 10-year note payable on January 1, 2018, of $800,000. The note requires annual…

A:

Q: On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for…

A: Interest bearing note:   When a company purchases a fixed asset, it is very difficult to pay the…

Q: On October 1, 2020, Arden Farm Equipment Company sold a pecan-harvesting machine to Valco Brothers…

A: Journal: Journal is the method of recording monetary business transactions in chronological order.…

Q: On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for…

A: Notes Parables: Notice the image for Notes Payable: Notes payable are long-term obligations that…

Q: On January 1, 2020, Magbaril Company sold equipment with a carrying amount of P800,000 to Macud…

A: On 01.01.2020, Magbaril company sold equipment to Macud company. Carrying value of equipment =…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Warranty means where the company is undertaking to make good the loss which has been incurred due to…

Q: The Schitt Company borrowed $900 on January 1, 2020 at an annual rate of interest of eight percent.…

A: Interest Expense - Interest Expense is the amount payable on the borrowed money. It is the expense…

Q: Cucina Corporation signed a new installment note on January 1, 2021, and deposited the proceeds of…

A: Working note: Computation of annual installment payments:

Q: Assuming the customer’s borrowing rate is 5%, prepare all journal entries for 2019 and 2020 under…

A: At first, we will find out the present value of the note payable.

Q: On January 1, 2021. This Company acquired a machine by issuing a 3-year, 3%, P4,000,000 note…

A: As per IFRS 9, a Financial instrument, the financial liability is initially recognized at amortized…

Q: To finance the purchase of the machine by issuing RM6 million, six-year, zero interest-bearing note…

A:

Q: Use the following information for the next two questions. Funan Industries purchases new…

A: PV of notes payable=Cash price-down payment =79000-10000=69000

Q: On January 1, 2021, Corvallis Carnivals borrows $30,000 to purchase a delivery truck by agreeing to…

A: Given: To calculate the note payable and the first monthly payment as,

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.