Chapter 8 NOTE Payable PDF

Preview

Summary

Download Chapter 8 NOTE Payable PDF

Description

ANDREA GERALDINO BSA 2B CHAPTER 8 NOTE PAYABLE

Problem 8-1(IAA) 1. Prepare the journal entry for the issuance of the note payable by Ontario Company. Cash 8,000,000 Note Payable 8,000,000 2. Prepare the appropriate adjusting entry for the not payable on December 31, 2020. Interest Expense 160,000 Interest payable 160,000 (8, 000, 000/12x2x12%= 159,999.999999 or 160, 000) 3. Prepare the journal entry for the payment of the note payable. Interest Expense 560,000 Interest Payable 160,000 Note Payable 8,000,000 Cash 8,720,000 (8, 000, 000/12x7x12%= 559,999.999999 or 560, 000)

Problem 8-2(IAA) 1. Prepare the appropriate journal entry by Home Company to record the issuance of the note. Cash 5,520,000 Discount on Note Payable 480,000 Note Payable 6,000,000 (6, 000,000/12x8x12%= 480, 000) 2. Prepare the adjusting entry on December 31, 2020. Interest Expense 180,000 Discount on Note payable 180, 0000 (480, 000x3/12= 180, 000) 3. Present the note payable on December 31, 2020. Note payable 6,000,000 Discount on Note payable (300,000) Carrying amount 5,700,000 (480, 000-180,000= 300,000)

4. Prepare the journal entry to record the discount amortization and payment of the note payable on June 1, 2021, date of maturity. Interest Expense 300,000 Discount on Note payable 300,000 (480,000x5/12= 300, 000) Note payable Cash

6,000,000 6,000,000

5. Suppose the note has been structured as a 12% note with interest and principal payable at maturity. Prepare the appropriate journal entry to record the issuance of the note by Home Company. Cash 6,000,000 Note payable 6,000,000 6. Prepare the appropriate journal entry on December 31, 2020 to accrue interest expense on the note described in requirement 5. Interest Expense 180,000 Accrued Interest payable 180,000 (6, 000, 000/12x3x12%= 180, 000) 7. Prepare the journal entry to record the payment of note payable described in requirement 5 on the date of maturity. Note Payable 6,000,000 Interest Expense 300,000 Cash 6,300,000 (6,000,000/12x5x12%= 300,000) Problem 8-3(IAA) 1. Prepare the journal entry for the issuance of the note by Trinoma. Cash 24,000,000 Note Payable 24,000,000 2. Prepare the appropriate adjusting entry for the note in December 31, 2020. Interest Expense 960, 000 Accrued Interest payable 960,000 (24,000,000/12x4x12%= 960, 000)

3. Prepare the journal entry for the payment of the note at maturity. Note payable 24,000,000 Accrued Interest payable 960,000

Interest Expense Cash

1,200,000 26,160,000 (24,000,000/12x5x12%= 1,200,000)

Problem 8-4(ICP) Prepare the appropriate journal entries through the maturity of each liability. 2020 Feb. 1 NONE April 1 Cash

12,000,000 12,000,000

Note payable July 1 Note payable Discount on Note payable Cash

12,000,000 240,000 12,240,000 (12,000/12x3x8%= 240,000)

Nov. 1 Cash Discount on Note payable Note payable

19,100,000 900, 000 20,000,000 (2,000,000x6%x9/12= 900,000)

Dec. 31 Interest Expense Discount on Note payable

200,000 200,000

(900,000x2/9= 200,000)

2021 Aug. 1 Interest expense Discount on Note payable

700,000

(900,000/9x7= 700,000)

700,000

Note payable Cash Problem 8-24 Multiple choice (AICPA Adapted) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

C B B A D A D D B B

20,000,000 20,000,000...