Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter B, Problem 13E
To determine
Compute the amount that can be borrowed (1) A promise to repay $90,000 seven years from now at an interest rate of 6% ; (2) An agreement made on February 1, 2019, to make three separate payments of $20,000 on February 1 of 2020, 2021, and 2022. The annual interest rate is 10%.
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Compute the amount that can be borrowed under each of the following circumstances: 1. A promise to repay $90,000 seven years from now at an interest rate of 6%. 2. An agreement made on February 1, 2019, to make three separate payments of $20,000 on February 1 of 2020, 2021, and 2022. The annual interest rate is 10%.
Questions # 14-16 are based on the following:
On January 1, 2021, Music Angel issued a four-year installment note in the amount of $5,100,000 in
exchange for a new machine. The note is to be paid in four equal payments of $1,574,210 at the end of
each year. The payments include interest at the rate of 9%.
14. Interest expense will be recorded at December 31, 2021 for:
A. $1,324,981
B. $1,115,210
C. $249,229
D. $459,000
15. By how much will the carrying value decrease when the first payment is made?
A. $1,574,210
B. $459,000
C. $1,115,210
D. $358,631
16. What is the carrying value at December 31, 2022?
A. $2,769,211
B. $5,100,000
C. $3,984,790
D. $1,951,580
On January 1, 2020, Empress Bank granted a loan to a borrower. The interest rate on the
loan is 10% payable annually on December 31, 2020. The loan matures in three years on
December 31, 2022.
Principal amount 5,000,000
Direct origination cost incurred 457,500
Origination fee received from the borrower 200,000
After considering the origination fee charged against the borrower and the direct
origination cost incurred, the effective rate on the loan is 8%.
Prepare the journal entries for 2020, 2021, and 2022.
Chapter B Solutions
Principles of Financial Accounting.
Ch. B - Prob. 1QSCh. B - Prob. 2QSCh. B - Prob. 3QSCh. B - Prob. 4QSCh. B - Prob. 5QSCh. B - Beene Distributing is considering a project that...Ch. B - Prob. 7QSCh. B - Prob. 1ECh. B - Prob. 2ECh. B - Prob. 3E
Ch. B - Prob. 4ECh. B - Prob. 5ECh. B - Prob. 6ECh. B - Prob. 7ECh. B - Number of periods of an investment Keith Riggins...Ch. B - Prob. 9ECh. B - Prob. 10ECh. B - Prob. 11ECh. B - Prob. 12ECh. B - Prob. 13ECh. B - Prob. 14ECh. B - Prob. 15ECh. B - Future value of an annuity Kelly Malone plans to...Ch. B - Prob. 17ECh. B - Practical applications of the time value of money...Ch. B - Using present and future value tables For each of...
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