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omeli [17]
3 years ago
14

On January 1, 2017, MM Co. borrows $350,000 cash from a bank and in return signs an 4% installment note for five annual payments

of $78,619 each, with the first payment due one year after the note is signed
Required:
a. Prepare the journal entry to record issuance of the note.
b. For the first $96,590 annual payment at December 31, 2017, what amount goes toward interest expense? What amount goes toward principal reduction of the note?
Business
1 answer:
frez [133]3 years ago
6 0

Answer:

a. Journal entry to record the issue of notes

Date           Account Title & Explanation   Debit $        Credit $

Jan 1          Cash                                           350,000

                 Notes Payable                                                350,000

                  (To record the issue of notes payable)

b. Calculation of Interest Expenses

                      Particulars                           Amount $

Beginning balance of loan payment         350,000

Annual interest rate                                          4%

Interest expenses                                         14,000

Hence the interest expenses = $14,000

Principal amount is calculated as the difference between the annual payment and the interest expenses as seen below

                   Particulars                           Amount $

Annual payment                                      96,590

Less: Interest expenses                          14,000

Principal Payment                                  82,590

Hence, the principal payment =$82,590

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Solution :

It is given that Fizzo and Pop Hop sells orange soda. Fizzo advertises about his drinks while Pop Hop does not advertises.

According to the matrix provided we can conclude that :

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-- If Fizzo does not advertise, it will earn profit of about 2 million dollar if Pop Hop advertises and 9 million dollar if Pop Hop does not advertises.

-- When Pop Hop wished to advertise , Fizzo will make a higher profit if he chooses to advertise.

-- When Pop Hop do not advertise, Fizzo will make a higher profit when it chooses to advertise.

And if both the firms acts independently and they start off not advertising, then --- both firms will advertise as both of them will earn highest profits each.

If both the firms collude and both firms start off not advertising, the strategies they will end up is that both the firms will not advertise as the joint profit will be maximized.

3 0
3 years ago
Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities. The year-en
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Answer:

Dr Available for sale securities 11,500

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Explanation:

The securities cost is $420,000 while the fair market value is $431,500, so the difference is an unrealized gain of = $431,500 - $420,000 = $11,500.

Unrealized gains are included in Other comprehensive income account, which belongs under stockholder equity. When unrealized gains increase, then they should be credited.

Since the securities are held as investment assets, they should also increase by debiting the account.

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A checking account is the type of account option that is designed to house money for easy access, either by check or by debit card.

<h3>What is a checking account?</h3>

It is also called a transaction account. It is a bank account that allows you to easily deposit & withdraw money for daily transactions. A checking account can also include depositing a check you receive, taking out cash with your debit card or setting up direct deposit for your paychecks.

Hence, the checking account is the type of account option that is designed to house money for easy access, either by check or by debit card.

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Answer:

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