On January 1, Year 1, Barnes Company issued a $100,000 installment note. The note had a 10-year term and an 8 percent interest r
1 answer:
Answer:
(A) debit: interest expense $8,000; notes payable $6,903; credit: cash $14,903
Explanation:
Provided annual payment = $14,903
Interest for first year = $100,000 8% = $8,000
Therefore principal = $14,903 - $8,000 = $6,903
When the cash payment will be made, then
Interest as an expense amounting $8,000 will be debited as all expenses and losses are debited.
Principal payment of notes issued will also be debited, as this was liability and a part of liability is settled therefore, it will be reversal of creating liability that is debit by amount of $6,903
Also there is cash payment therefore, because of cash payment asset will be decreased, cash account will be credited by amount = $14,903
Journal Entry
Interest Expense Dr. $8,000
Notes Payable Dr. $6,903
To Cash A/c $14,903
Therefore correct option is
(A) debit: interest expense $8,000; notes payable $6,903; credit: cash $14,903
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Answer:
$109,688.89
Explanation:
According to the scenario, computation of given data are as follows,
Formula for Net present value are as follows,
NPV = -Investment in fixed asset - Net working Capital + Operating cashflow × ( 1 - ) ÷ r + Net working capital ×
Where, r = rate of return
n = number of years
By putting the value, we get
NPV = -28,000 - 2,800 + 32,500 × ( 1 - ) ÷ 0.14 + 2,800 ×
By solving the above equation, we get
NPV = $109,688.89