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finlep [7]
3 years ago
15

Determine current portion of long term note payable On January 1, Irving company purchased equipment of 280,000 with a long term

note payable. The debt is payable in annual installments of 56,000 due in December 31 of each year. At the date of purchase, how will Irving company report the note payable?
Business
1 answer:
user100 [1]3 years ago
5 0

Answer:

The current portion of any long term liability is the amount which is due in the current year of the balance sheet. So in this case the current portion of the long term note payable is $56,000 as it is the amount which is due within the current balance sheet year.

                                                   Debit                                         Credit

Equipment                                   280,000

Long term Note payable                                                                 280,000

Long term Note payable               56,000

Current portion of long term note                                                     56,000

First we will debit equipment because an asset is increasing and credit long term note payable because a liability is increasing.

Then we will debit long term note payable as a portion of the long term note is a current liability, and we will thus credit current portion of a long term note.

   

Explanation:

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Last week, a gift shop’s employees heard their longtime store manager announce that she is leaving. Now they’ve read an announce
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Jose wants to find out how many men wear bright colored ties. Which
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3 years ago
Biden Resorts Company currently has 0.2 million common shares of stock outstanding and the stock has a beta of 2.2. It also has
frutty [35]

Answer:

Hence, the weighted average cost of capital is 15.87%.

Explanation:

We have to find current weights,  

Value of equity = Shares x Share price = 0.2 x 10 = $2 million  

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Value of Debt = Px [1 - (1 + r)-n] / r + FV / (1 + r)n

= 0.04 x [1 - (1 + 0.06825)-10] / 0.06825 + 1 / (1 + 0.06825)10

= $0.8 million

Total Value = 2 + 0.8 = $2.8 million

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Weight of Equity = 2 / 2.8 = 71.45%

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= 0.2857 x 7.5

= $2.14 million

Since the amount of debt to be raised is less than $2.5 million, the yield will be 13.65%  

Cost of Equity = Risk Free Rate + Beta x (Market Return - Risk Free Rate)

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= 0.2857 x 13.65% x (1 - 0.3) + 0.7145 x 18.4%

= 15.87%

8 0
3 years ago
Pennsylvania Company supplied the following information:
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Answer:

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