On October 31, 2015, a company signed a note for $50,000 with a bank. The terms...

On October 31, 2015, a company signed a note for $50,000 with a bank. The terms were 10% for 9 months. On December 31, 2015, adjusting entries are recorded. What is the correct adjusting entry for this event

Group of answer choices

Debit Interest Expense and credit Interest Payable for $833.33.

. Debit Interest Expense and credit Notes Payable for $833.33.

Debit Interest Payable and credit Interest Expense for $3,750.

Debit Interest Expense and credit Interest Payable for $3,750.

Solutions

Expert Solution

Answer : Debit interest Expenses and Credit interest Payables $ 833,33. Option one

Interest Payable at Year End = 50,000*10%*2/12 = 833,33

Adjustment Entry

Debit : Interest Expenses $ 833,33

Credit : Interest Payables $833.33

ekkarill92 answered 2 years ago

Next > < Previous

Related Solutions

On December 31, 2017, Flint Company signed a $ 1,038,100 note to Buffalo Bank. The market...

On December 31, 2017, Flint Company signed a $ 1,038,100 note to Buffalo Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Flint’s financial situation worsened. On December 31, 2019, Buffalo Bank determined that it was probable that the company would pay back only $ 622,860 of the principal at maturity. However, it was considered likely that interest...

On December 31, 2020, Pina Company signed a $1,056,300 note to Grouper Bank. The market interest...

On December 31, 2020, Pina Company signed a $1,056,300 note to Grouper Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Pina’s financial situation worsened. On December 31, 2022, Grouper Bank determined that it was probable that the company would pay back only $633,780 of the principal at maturity. However, it was considered likely that interest would...

On December 31, 2020, Teal Company signed a $1,022,000 note to Flint Bank. The market interest...

On December 31, 2020, Teal Company signed a $1,022,000 note to Flint Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Teal’s financial situation worsened. On December 31, 2022, Flint Bank determined that it was probable that the company would pay back only $613,200 of the principal at maturity. However, it was considered likely that interest would...

On December 31, 2020, Teal Company signed a $1,137,500 note to Flint Bank. The market interest...

On December 31, 2020, Teal Company signed a $1,137,500 note to Flint Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Teal’s financial situation worsened. On December 31, 2022, Flint Bank determined that it was probable that the company would pay back only $682,500 of the principal at maturity. However, it was considered likely that interest would...

Braxton Co. borrowed $65,000 from the bank on October 1, 2015. The note had an 4.5...

Braxton Co. borrowed $65,000 from the bank on October 1, 2015. The note had an 4.5 percent annual rate of interest and matured on March 31, 2016. Interest and principal will be paid in cash on the maturity date. Required: A. What amount of cash did Braxton Co. pay for interest in 2015? B. What amount of interest expense was reported on the 2015 income statement? C. What is the total liabilities reported on the December 31, 2015, balance sheet?...

The bank portion of the bank reconciliation for Blossom Company at October 31, 2021, was as...

The bank portion of the bank reconciliation for Blossom Company at October 31, 2021, was as follows: BLOSSOM COMPANY Bank Reconciliation October 31, 2021 Cash balance per bank $11,771 Add: Deposits in transit 1,580 13,351 Less: Outstanding cheques #2451 $1,200 #2470 960 #2471 882 #2472 516 #2474 1,060 4,618 Adjusted cash balance per bank $8,733 The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following: BLOSSOM COMPANY...

The bank portion of the bank reconciliation for Blossom Company at October 31, 2021, was as...

The bank portion of the bank reconciliation for Blossom Company at October 31, 2021, was as follows: BLOSSOM COMPANY Bank Reconciliation October 31, 2021 Cash balance per bank $11,000 Add: Deposits in transit 1,500 12,500 Less: Outstanding cheques #2451 $1,100 #2470 850 #2471 780 #2472 450 #2474 1,000 4,180 Adjusted cash balance per bank $8,320 The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following: BLOSSOM COMPANY...

On October 30, 2016, Sanchez Company acquired a piece of machinery and signed a 12-month note...

On October 30, 2016, Sanchez Company acquired a piece of machinery and signed a 12-month note for $24,000. The face value of the note includes the price of the machinery and interest. The note is to be paid in four $6,000 quarterly installments. The value of the machinery is the present value of the four quarterly payments discounted at an annual interest rate of 16%. Required: 1. Prepare all the journal entries required to record the preceding information including the...

On October 30, 2016, Sanchez Company acquired a piece of machinery and signed a 12-month note...

Canliss Mining Company borrowed money from a local bank. The note the company signed requires five...

Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $16,000 beginning immediately. The interest rate on the note is 6%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow?

Subjects