BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Entries for installment note transactions

On the first day of the fiscal year, Shiller Company borrowed $85,000 by giving a seven-year, 7% installment note to Soros Bank. The note requires annual payments of $15,772, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $5,950 and principal repayment of $9,822.

a. Journalize the entries to record the following:

1. Issued the installment note for cash on the first day of the fiscal year.

2. Paid the first annual payment on the note.

b. Explain how the notes payable would be reported on the balance sheet at the end of the first year.

a (1)

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.

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

To Journalize: The issuance of the installment note.

Explanation

Prepare journal entry to record the issuance of the installment note.

Date Account Title and Explanation

Post

Ref.

Debit

($)

Credit

($)

  Cash &#...

2.

To determine

To Journalize: First annual payment on the note.

(b)

To determine

To Explain: How notes payable would be reported on the balance sheet at end of the first year.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Name the three types of documents.

Accounting Information Systems

Discuss the differences between static and flexible budgets.

Managerial Accounting: The Cornerstone of Business Decision-Making

PRICE/EARNINGS RATIO A company has an EPS of 2.00, a book value per share of 20, and a market/book ratio of 1.2...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

REAL OPTIONS Use a spreadsheet model to evaluate the project analyzed in problem 13-7.

Fundamentals of Financial Management (MindTap Course List)

What are the key provisions of SOX?

Pkg Acc Infor Systems MS VISIO CD