Question
In: Accounting
Hoover Company signs a four month promissory note for $ 270,000 on January 31, 2016. The...
Hoover Company signs a four month promissory note for $ 270,000 on January 31, 2016. The company is required to pay $ 67, 500 on the note each month. The first payment is on February 1, 2016, and the final payment is on May 1, 2016. How will this note be reported on the balance sheet at January 31, 2016?
Solutions
Expert Solution
- We should know that Current Liabilities are those liabilities that are required to be paid in near future (within a year).
Current Liabilities are shown under ‘Liabilities’ on the Balance Sheet.
- Also, note that if there is a Long Term liability payable (repayable after 1 year), then that portion of debt that is repayable after 1 year is classified under “Long Term Liabilities” while that portion that is repayable within year is classified under “Current Liabilities”.
- In the given question, the Note (payable) is of $ 270,000
--Monthly payment = $ 67,500
--This means that full Note Payable will be repaid in 4 months (67500 x 4 =270000)
--Since whole of the amount of Notes Payable is to be made within a year (and a very near future), this Note will be reported on the Balance Sheet at $ 270,000 under “Current Liabilities” heading of “Liabilities” on Balance Sheet at January 31, 2016.
ekkarill92 answered 1 year agoRelated Solutions
On December 31, 2016, TTT Company finished consultation services and accepted in exchange a promissory note...
On December 31, 2016, TTT Company finished consultation services
and accepted in exchange a promissory note with a face value of
$800,000, a due date of December 31, 2019, and a stated rate of 5%,
with interest receivable at the end of each year.
The fair value of the services
performed by TTT Company is not readily determinable and the note
receivable is not readily marketable. Under the circumstances, the
note is considered to have an appropriate imputed rate of...
On January 1, 2019, FLOWERS Inc. rendered services in exchange for a four-year promissory note having...
On January 1, 2019, FLOWERS Inc. rendered services in exchange
for a four-year promissory note having a face value of $10,000.
Interest at a rate of 3% is payable annually on January 1 (first
payment
Jan 1, 2020). The customer has credit ratings that require it to
borrow money at 8% interest.
FLOWERS uses IFRS.
Required: Show and label all calculations.
(Round to the nearest dollar.)
What would be the value of the service revenue recorded on
January 1, 2019?...
On January 1, 2019, FLOWERS Inc. rendered services in exchange for a four-year promissory note having...
On January 1, 2019, FLOWERS Inc. rendered services in exchange
for a four-year promissory note having a face value of $10,000.
Interest at a rate of 3% is payable annually on January 1 (first
payment Jan 1, 2020). The customer has credit ratings that require
it to borrow money at 8% interest. FLOWERS uses IFRS. Required:
Show and label all calculations. (Round to the nearest dollar.)
What would be the value of the service revenue recorded on
January 1, 2019?...
34. Genuine Parts received a promissory note from a customer on March 1, 2016. The face...
34. Genuine Parts received a promissory note from a customer on
March 1, 2016. The face amount of the note is $8,000, the terms are
90 days and 9% interest. At the maturity date, the customer pays
the amount due for the note and interest. What entry is required on
the books of Genuine Parts on the maturity date assuming none of
the interest had already been recognized?
A) Increase cash $8,000; Decrease notes receivable
$8,000
B) Increase cash $8,180;...
In the month of January, Memorial Hospital provided $270,000 in services. If the hospital has a...
In the month of January, Memorial Hospital provided $270,000 in
services. If the hospital has a pattern of debt collections of 20%
collected in the first month, 30% collected in the second month,
25% collected in the third month, 15% collected in the fourth
month, 5% collected in the fifth month, and 5% written off as bad
debt in the sixth month, at the end of March (3 months out), how
much money will Memorial Hospital have collected?
Timmer Company signs a lease agreement dated January 1, 2016, that provides for it to lease...
Timmer Company signs a lease agreement dated January 1, 2016,
that provides for it to lease equipment from Landau Company
beginning January 1, 2016. The lease terms, provisions, and related
events are as follows:
•
The lease is noncancelable and has a term of 5 years.
•
The annual rentals are $83,222.92, payable at the end of each
year, and provide Landau with a 12% annual rate of return on its
net investment.
•
Timmer agrees to pay all executory...
Timmer Company signs a lease agreement dated January 1, 2016, that provides for it to lease...
Timmer Company signs a lease agreement dated January 1, 2016,
that provides for it to lease equipment from Landau Company
beginning January 1, 2016. The lease terms, provisions, and related
events are as follows:
•
The lease is noncancelable and has
a term of 5 years.
•
The annual rentals are $83,222.92,
payable at the end of each year, and provide Landau with a 12%
annual rate of return on its net investment.
•
Timmer agrees to pay all executory...
Adden Company signs a lease agreement dated January 1, 2016, that provides for it to lease...
Adden Company signs a lease agreement dated January 1, 2016,
that provides for it to lease heavy equipment from Scott Rental
Company beginning January 1, 2016. The lease terms, provisions, and
related events are as follows: 1. The lease term is 4 years. The
lease is noncancelable and requires annual rental payments of
$20,000 to be paid in advance at the beginning of each year. 2. The
cost, and also fair value, of the heavy equipment to Scott at the...
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...
On January 1, 2016, Eagle borrows $22,000 cash by signing a four-year, 6% installment note. The...
On January 1, 2016, Eagle borrows $22,000 cash by signing a
four-year, 6% installment note. The note requires four equal total
payments of accrued interest and principal on December 31 of each
year from 2016 through 2019. (Table B.1, Table B.2, Table B.3, and
Table B.4) (Use appropriate factor(s) from the tables
provided. Round your intermediate calculations and final answers to
the nearest dollar amount. Round all table values to 4 decimal
places, and use the rounded table values in...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A neurologist needs to counsel a stroke victim and her husband about possible outcomes, treatment options,...
- Case Study: Personal Beliefs in the Workplace Don Shakow was a prominent professional who worked in...
- 1: Competency framework usage is the modern best practice in management. What is meant by competency...
- A 19.34 g mixture of sugar (C12H22O11) and table salt (NaCl) is dissolved in 231 g...
- Young and Company claims that its pressurized diving bell will, on average, maintain its integrity to...
- 1) Alternative compiled code sequence using instructions in classes A, B, C. What is the average...
- An asset is purchased on January 1 for $48,700. It is expected to have a useful...
ADVERTISEMENT