Question

Assume that Cram Sales Company completed the following note payable transactions:_______.2016July 1 Purchased delivery truck costing $57,000 by issuing a one-year, 6% note payable. Dec 31 Accrued interest on the note payable. 2017 Jul 1 Paid the note payable at maturity. Read the requirements. Requirement 1. How much interest expense must be accrued at December 31, 2016? Round your answer to the nearest whole dollar. The interest expense accrued at December 31, 2016 is $ Requirement 2. Determine the amount of Cram Sales' final payment on October 1, 2017. The amount of Cram Sales final payment on October 1, 2017 is $ Requirement 3. How much interest expense will Cram Sales report for 2016 and for 2017? (Round your answers to the nearest whole dollar) The company will report interest expense of $ in 2016 and $ in 2017.

Answer 1

Answer:

1. How much interest expense must be accrued at December 31, 2016? $1,710

2. Determine the amount of Cram Sales' final payment on July 1, 2017.

$60,420

3. How much interest expense will Cram Sales report for 2016 and for 2017?

interest expense 2016 = $1,710

interest expense 2017 = $1,710

Explanation:

July 1 Purchased delivery truck costing $57,000 by issuing a one-year, 6% note payable.

Dr Vehicles 57,000

    Cr Notes payable 57,000

Dec 31 Accrued interest on the note payable. 2017

Dr Interest expense 1,710

    Cr Interest payable 1,710

Jul 1 Paid the note payable at maturity.

Dr Notes payable 57,000

Dr Interest payable 1,710

Dr Interest expense 1,710

    Cr Cash 60,420