Answer:
1. Able must pay Regal Corporation $599,400 on September 1, 2019, when the note matures.
2. The amount of Interest Able will recognize on this Notes Payable is 39,600
3. The total cash (including interest) paid for the building purchased by Able is $1,179,400
4. Payroll related expense does not come into picture in this question. So it is not answered.
Explanation:
1. According to the given data we have the following:
Rate of Interest = 11%
Therefore:
Year Amount Interest
September 1, 2018 $540,000
December 31, 2018 $19,800
September 1, 2019 $39,600
Total $540,000 $59,400
Therefore, Total Payable=Notes payable+Interest 540000 Total Payable= $540,000+$59,400
Total Payable=$599,400
Able must pay Regal Corporation $599,400 on September 1, 2019, when the note matures.
2. The amount of Interest Able will recognize on this Notes Payable is 39,600
3. To calculate The total cash paid for building purchased by Able including interest we have to make the following calculation:
Total cash paid for purchase of building=Cash paid at the time of purchase of building+Notes payable+Interest
Total cash paid for purchase of building=$580,000+$540,000+$59,400
Total cash paid for purchase of building=$1,179,400
The total cash (including interest) paid for the building purchased by Able is $1,179,400
4. Payroll related expense does not come into picture in this question. So it is not answered.
