Question

In: Accounting

Dan Dayle started a business by issuing an $100,000 face-value note to First State Bank on...

Dan Dayle started a business by issuing an $100,000 face-value note to First State Bank on January 1, Year 1. The note had an 8 percent annual rate of interest and a five-year term. Payments of $25,046 are to be made each December 31 for five years. Required a. What portion of the December 31, Year 1, payment is applied to interest expense and principal? b. What is the principal balance on January 1, Year 2? c. What portion of the December 31, Year 2, payment is applied to interest expense and principal? (Round your answers to the nearest dollar amount.)

Solutions

Expert Solution


Related Solutions

Dan Dayle started a business by issuing an $90,000 face-value note to First State Bank on...
Dan Dayle started a business by issuing an $90,000 face-value note to First State Bank on January 1, Year 1. The note had an 8 percent annual rate of interest and a five-year term. Payments of $22,541 are to be made each December 31 for five years. b. What is the principal balance on January 1, Year 2? c. What portion of the December 31, Year 2, payment is applied to interest expense and principal? (Round your answers to the...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $100,000 face...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $100,000 face value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $30,192 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $52,000 cash per year. Organize the information in accounts under an accounting...
A company is looking to raise funds by issuing a promissory note with a face value...
A company is looking to raise funds by issuing a promissory note with a face value of $500,000 maturing in 70 days. The current market interest rate is 8% p.a. What is a promissary note? In your answer explain its distinguishing features and what type of company is likely to use this method to raise capital. How much would the company receive from this issue? The company has a minimum target of $490,000 to raise. Based on your answer in...
Assume a 2-year Euro-note, with a $100,000 face value, a coupon rate of 10%, and a...
Assume a 2-year Euro-note, with a $100,000 face value, a coupon rate of 10%, and a convexity of 4.53. If today’s YTM is11.5% and term structure is flat. Coupon frequency and compounding frequency are assumed to be annual. Please show all steps. a.What is the Macaulay duration of this bond? b.What is the exact price change in dollars if interest rates increase by 10 basis points (a uniform shift)? c.Use the duration model to calculate the approximate price change in...
ABC Incorporated started its business on Jan 1st 2012, issuing 100,000 shares for $2 each. Par...
ABC Incorporated started its business on Jan 1st 2012, issuing 100,000 shares for $2 each. Par value of each share was $0.10. The following is the relevant information for the year ending 2012. On Jan 1st, 2012, the company purchased a two-year fire insurance policy for $10,000 and paid it with cash. In 2012, the company purchased office supplies worth $20,000 cash. All these supplies are used up in 2012. Purchased equipment for $50,000 using a short-term loan on Apr...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $62,500 face...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $62,500 face value, four-year term note that had an 9 percent annual interest rate. The note is to be repaid by making annual cash payments of $19,292 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $30,625 cash per year. Prepare an income statement, a balance sheet, and...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,121 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $22,260 cash per year. Prepare an income statement, a balance sheet, and...
Dan Watson started a small merchandising business in Year 1. The business experienced the following events...
Dan Watson started a small merchandising business in Year 1. The business experienced the following events during its first year of operation. Assume that Watson uses the perpetual inventory system. Acquired $33,000 cash from the issue of common stock. Purchased inventory for $26,400 cash. Sold inventory costing $15,600 for $30,000 cash. Required a. Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity,...
Dan Watson started a small merchandising business in Year 1. The business experienced the following events...
Dan Watson started a small merchandising business in Year 1. The business experienced the following events during its first year of operation. Assume that Watson uses the perpetual inventory system. Acquired $25,000 cash from the issue of common stock. Purchased inventory for $20,000 cash. Sold inventory costing $18,600 for $32,500 cash. Required a. Record the events in general journal format. b. Post the entries to T-accounts. c. Determine the amount of gross margin. d. What is the amount of net...
Dan Watson started a small merchandising business in Year 1. The business experienced the following events...
Dan Watson started a small merchandising business in Year 1. The business experienced the following events during its first year of operation. Assume that Watson uses the perpetual inventory system. Acquired $25,000 cash from the issue of common stock. Purchased inventory for $20,000 cash. Sold inventory costing $18,600 for $32,500 cash. Required a. Record the events in general journal format. b. Post the entries to T-accounts. c. Determine the amount of gross margin. d. What is the amount of net...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT