Pearson eText Horngren's Financial & Managerial Accounting: The Financial Chapters -- Instant Access (Pearson+)
7th Edition
ISBN: 9780136714194
Author: Tracie Miller-Nobles, Brenda Mattison
Publisher: PEARSON+
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Chapter 11, Problem 3QC
To determine
Long-term notes payable: Long-term notes payable represent a legal and written promise made by the business to pay a debt with interest over a period of more than a year. It is reported under the long-term liability section of the balance sheet.
Current portion of long-term notes payable: The principal amount of notes payable which would be paid within one year is called as current portion of long-term notes payable. The current portion of long-term notes payable is reported as a current liability.
To identify: The true statement.
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Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. Assume the company makes timely principal payments of $5,000 each year at December 31 plus interest at 8%. Which of the following is true?
a. After the first payment is made, the company owes $15,000 plus three years’ interest.
b. After the first payment, $15,000 would be shown as a long-term liability.
c. After the first payment is made, $5,000 would be shown as the current portion due on the long-term note.
d. Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet.
8. A company owes $20,000 on a truck purchased. Assume the company makes timely principle payments of $5,000 each year at Dec 31st. Which of the following is true.
a. after the 1st payment is made, $5000 would be shown as the current portion due on the long term note.
b. after the 1st payment is made, the company owes $15,000 plus three years interest.
c. Just before the last payment is made $5000 will appear as a long term liability on the balance sheet.
d. after the 1st payment, $15,000 would be shown as a long term liability
On January 1, Year 1, Brown Company borrowed cash from First Bank by issuing a $107,000 face-value, four-year term note that had an 6 percent annual interest rate. The
note is to be repaid by making annual cash payments of $30,879 that include both interest and principal on December 31 of each year. Brown used the proceeds from the
loan to purchase land that generated rental revenues of $59,000 cash per year.
b. Prepare an income statement and balance sheetfor each of the four years. Rent revenue is collected in cash at the end of each year. (Hint: Record the transactions for each
year in T-accounts before preparing the financial statements.)
Chapter 11 Solutions
Pearson eText Horngren's Financial & Managerial Accounting: The Financial Chapters -- Instant Access (Pearson+)
Ch. 11 - On January 1, 2016, a business borrowed 18,000 on...Ch. 11 - A company sells 180,000 (selling price) of goods...Ch. 11 - Prob. 3QCCh. 11 - Prob. 4QCCh. 11 - Prob. 5QCCh. 11 - Prob. 7QCCh. 11 - Vega Company expects to pay a 4% bonus on net...Ch. 11 - Prob. 9QCCh. 11 - Prob. 10QCCh. 11 - Prob. 1RQ
Ch. 11 - What is a current liability? Provide some examples...Ch. 11 - How is sales tax recorded? Is it considered an...Ch. 11 - How do unearned revenues arise?Ch. 11 - What do short-term notes payable represent?Ch. 11 - Coltrane Company has a 5,000 note payable that is...Ch. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 10RQCh. 11 - What are the two main controls for payroll?...Ch. 11 - When do businesses record warranty expense, and...Ch. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQ
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