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Law Incorporation [45]
3 years ago
7

Camp Elim obtains a $125,000, 6%, five-year installment note for a new camp bus on January 1, 2021. The note requires monthly in

stallment payments of $2,416.60 What journal entry will be recorded for the first month’s payment on January 31, 2021?
Multiple Choice

Debit interest expense $1,500; debit notes payable $916.60; credit cash $2,416.60

Debit notes payable $625; debit interest expense $1,791.60; credit cash $2,416.60

Debit interest expense $625; debit notes payable $1,791.60; credit cash $2,416.60

Debit notes payable $1,500; debit interest expense $916.60; credit cash $2,416.60
Business
1 answer:
kirza4 [7]3 years ago
5 0

Answer:

Option (B) is correct.

Explanation:

The Journal entry is as follows:

Interest expense A/c Dr. $625

Note payable A/c       Dr. $1791.60

To cash                                            $$2,416.60

(To record the first month’s payment on January 31, 2021)

Working notes:

Monthly interest expense:

= (Note payable × Interest rate per annum) ÷ 12 months

= ($125,000 × 6%) ÷ 12 months

= $625

Note payable = $2,416.60 - $625

                       = $1,791.60

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The worth of the shares when the stockholder originally purchased them is $1105.

<h3>What are shares?</h3>

Shares are fractional ownership interests in a corporation. For some businesses, shares are a type of financial instrument that allows for the equitable distribution of any declared residual profits in the form of dividends.

It is assumed that the purchase price of the share is $100. As the stockholder sold her shares for $1,403, making a profit of 27%, it implies that:

  127 = $1,403

∴ 100 = $1,403/127 × 100

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Therefore, $1104.72 is the original purchase price of the share.

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brainly.com/question/28392295

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