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3 years ago

Problem 8-2A Record notes payable and notes receivable (LO2)

Business

1 answer:

Finger [1]3 years ago

5 0

Answer:

1. Prepare the journal entries on October 1, 2015, to record the issuance of the note.

Journal entry for Precision Castparts

Dr Cash 40,600,000

Cr Notes payable 40,600,000

Journal entry for Midwest Bank

Dr Notes receivable 40,600,000

Cr Cash 40,600,000

2. Record the adjustment on December 31, 2015.

Journal entry for Precision Castparts

Dr Interest expense 812,000

Cr Interest payable 812,000

Journal entry for Midwest Bank

Dr Interest receivable 812,000

Cr Interest revenue 812,000

3. Prepare the journal entry on September 30, 2016, to record payment of the notes payable at maturity

Journal entry for Precision Castparts

Dr Notes payable 40,600,000

Dr Interest expense 2,436,000

Dr Interest payable 812,000

Cr Cash 43,848,000

Journal entry for Midwest Bank

Dr Cash 43,848,000

Cr Notes receivable 40,600,000

Cr Interest receivable 812,000

Cr Interest revenue 2,436,000

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Answer:

Explanation:

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3 years ago

RT is about to loan his granddaughter Cynthia $10,000 for 1 year. RT’s TVOM, based upon his current investment earnings, is 12%,

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Answer:

They should not be able to successfully negotiate the terms of this loan within these parameters.

Explanation:

It has been provided that RT earns 12% on his current investments and would not like to receive an interest rate of less than 12% on the loan he gives.

if RT gives a loan of $10,000 for one year, he would charge an interest rate of minimum 12%.

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