On January 1, 2018 Kimmel Company accepts a $53000 non interest bearing note from a customer...

On January 1, 2018 Kimmel Company accepts a $53000 non interest bearing note from a customer for services provided. The note is to be paid in 4 equal installments every 6 months (payments every July 1 and January 1 with the first payment on July 1, 2018) An assumed interest rate of 9% is implied. Round installments to the nearest dollar.

A) Prepare an amortization table for this note. Round amounts to the nearest dollar. Clearly label your rows with dates for each recognition of interest revenue/discount amortization and for each installment payment. NOTE: Kimmel Corp prepares financial statements (and recognizes interest revenue) semiannually on each June 30th and December 31st.

B) Prepaire T Accounts for note receivable and discount on notes receivable witha ll entries posted from 1/1/18 to 12/31/18

C) How much interest revenue would be on the income statement for the year ended December 31,2018?

Expert Solution

1-	value of sales	Using present value function in MS excel	PV(4.5%,4,0,53000,0)	($44,444)

2-	Period	balance	premium amortized = beginning balance*9%/2	balance in premium account = balance-premium amortized	carrying value = beginning balance+premium amortized
	0			8556	44444
	1	44444	1999.98	6556.02	46443.98
	2	46443.98	2089.9791	4466.0409	48533.9591
	3	48533.96	2184.02816	2282.012741	50717.9873
	4	50717.99	2282.309427	-0.296686177	53000.2967

3-		T- Account
		Accounts receivables
1-Jan	sales revenue	44444	31-Dec	balance	44444

		premium on notes payable
30-Jun	interest income	1999.98	1-Jan	notes receivables	8556
31-Dec	interest income	2089.979
31-Dec	balance	4466.041

		interest revenue
31-Dec	balance	4089.959	30-Jun	premium on notes payable	1999.98
			31-Dec	premium on notes payable	2089.9791

4-	total interest revenue for 2018		4089.9591

ekkarill92 answered 1 year ago

On Jan. first, 2018, Snuff Company accepts 60000 non-interest bearing note from a customer for the...

On Jan. first, 2018, Snuff Company accepts 60000 non-interest bearing note from a customer for the sale of goods. The note is to be paid in 3 equal installments every Dec. 31st (first payment on Dec. 31, 2018). An assumed interest rate of 10% is implied. Round installment payments to the nearest dollar. pt 1: Determine the PV of the note. Show all computations or calculator imputs. pt 2: Prepare an amortization table in Excell to show the revenue recognized...

How is Interest-Bearing Note different from Non-Interest Bearing Note? How are the journal entries different for...

How is Interest-Bearing Note different from Non-Interest Bearing Note? How are the journal entries different for each of them? Provide examples of each joirnal entry.

Selkirk Company obtained a $30,000 note receivable from a customer on January 1, 2018. The note,...

Selkirk Company obtained a $30,000 note receivable from a customer on January 1, 2018. The note, along with interest at 12%, is due on July 1, 2018. On February 28, 2018, Selkirk discounted the note at Unionville Bank. The bank’s discount rate is 14%. Required: Prepare the journal entries required on February 28, 2018, to accrue interest and to record the discounting for Selkirk. Assume that the discounting is accounted for as a sale. (If no entry is required for...

On January 1, 2019, Rubin Co. issued a 3-year non-interest-bearing note of $250,000 in exchange for...

On January 1, 2019, Rubin Co. issued a 3-year non-interest-bearing note of $250,000 in exchange for a custom-made machine for which there is no obvious market value. The appropriate discount rate is 5%. Prepare the journal entry to purchase this machine. Looking at the transaction above, how much interest expense would be recorded in 2019 by Rubin Co.?

Crane Company receives a $64,000, 7-year note bearing interest of 12% (paid annually) from a customer...

Crane Company receives a $64,000, 7-year note bearing interest of 12% (paid annually) from a customer at a time when the discount rate is 8%.

Oriole Company receives a $78,000, 10-year note bearing interest of 9% (paid annually) from a customer...

Oriole Company receives a $78,000, 10-year note bearing interest of 9% (paid annually) from a customer at a time when the discount rate is 11%. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the present value of the note received by Oriole? (Round answer to 2 decimal places, e.g. 25.25.) Present value of note received = ??

On October 1, Black Company receives a 10% interest-bearing note from Reese Company to settle a...

On October 1, Black Company receives a 10% interest-bearing note from Reese Company to settle a $22,600 account receivable. The note is due in six months. At December 31, Black should record interest revenue of a.$572 b.$565 c.$575 d.$562 Please answer it asap

3. Non-interest bearing note On June 30, 2016, the Esquire Company sold some merchandise to a...

3. Non-interest bearing note On June 30, 2016, the Esquire Company sold some merchandise to a customer for $30,000 and agreed to accept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $30,000 on March 31, 2017. The 8% rate is appropriate in this situation. Required: Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2016 interest accrual,...

On 1/1/20 Toyota sells a car for a non-interest bearing note. The car would normally sell...

On 1/1/20 Toyota sells a car for a non-interest bearing note. The car would normally sell for $75,000 in cash, but the customer instead opts to pay a lump sum of $100,000 in two years (this is the only payment). The car costs Toyota $55,000 to build. Assume that Toyota uses a perpetual inventory system and sells directly to the customer. 1. Record the two journal entries that Toyota should record for the sale (the second journal entry being for...

1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017,...

1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017, and received cash of $48,000. In addition, Flint agreed to sell merchandise to Garcia at an amount less than regular selling price over the 4-year period. The market rate of interest for similar notes is 12%. Prepare Flint Corporation’s January 1 journal entry. 2. At December 31, 2017, Wildhorse Corporation has the following account balances: Bonds payable, due January 1, 2026 $2,400,000 Discount on...

Question