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:
Speed of the truck should be 64.03 miles per hour to minimize the cost.
Explanation:
Data provided in the question:
Distance = 150 miles
Wage = $14 per hour
Cost of fuel = ( v² ÷ 250 )
Now,
Total time taken = Distance ÷ speed
= 150 ÷ v
Therefore,
Total cost, TC = Wage + Cost of fuel
= $14 × (150 ÷ v) + ( v² ÷ 250 )
=
for point of minima differentiating with respect to 'v'
TC'(v) = = 0
or
= 0
or
or
v³ = 2100 × 125
or
v = ∛262500
or
v = 64.03 miles per hour
hence,
Speed of the truck should be 64.03 miles per hour to minimize the cost.