Question 1

On April 1,2015,Ardos Gardening Products borrowed $100,000 on a 15%,10-year note with annual installment payments of $10,000 plus interest due on April 1 of each succeeding year.Provide the first journal entry for the issuance of the note.

Accepted Answer

The answer of On April 1,2015,Ardos Gardening Products borrowed $100,000...

Question 2

On January 1,2015,Bratios Company purchases equipment and signs a 6-year mortgage note for $80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2016.Calculate the portion of principal amount paid on the third installment.

Accepted Answer

The answer of On January 1,2015,Bratios Company purchases equipment and...

Question 3

In order to expand business,the management of Vereos Inc.decided to issue long-term notes payable for $50,000.The instrument carries interest at the rate of 12% with 10 equal yearly installments,beginning in one year.What will be the journal entry at the inception?

Accepted Answer

The answer of In order to expand business,the management of...

Question 4

On April 1,2015,Ardos Gardening Products borrowed $100,000 on a 15%,10-year note with annual installment payments of $10,000 plus interest due on April 1 of each succeeding year.Provide the journal entry for the first installment payment made on April 1,2016.

Accepted Answer

The answer of On April 1,2015,Ardos Gardening Products borrowed $100,000...

Question 5

Bonds are short-term debt issued to multiple lenders called bondholders,usually in increments of $1,000.

Accepted Answer

The answer of Bonds are short-term debt issued to multiple...

Question 6

On January 1,2015,Paramount Inc.issued long-term notes payable for $50,000.The note will be paid over ten years with payments of $5,000 plus 12% interest due each January 1,beginning January 1,2016.Prepare the amortization schedule for the first three payments.

Accepted Answer

The answer of On January 1,2015,Paramount Inc.issued long-term notes payable...

Question 7

On May 1,2015,Vantage Services issued a long-term note payable for $35,000.It is payable over a 5-year term in $7,000 annual principal payments plus interest,on May 1 of each year beginning on May 1,2016.Provide the initial journal entry for the issuance of the note.

Accepted Answer

The answer of On May 1,2015,Vantage Services issued a long-term...

Question 8

On January 1,2015,Bratios Company purchases equipment and signs a 6-year mortgage note for $80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2016.Calculate the balance of the Mortgage Payable account after the payment of the first installment.

Accepted Answer

To find the balance of the Mortgage Payable account after the payment of the first installment, we need to calculate how much of the principal balance is paid off with the first payment, and then subtract that amount from the total principal balance.

The total principal balance of the mortgage note is $80,000, and the annual payment is $21,139. To find out how much of the payment goes towards the principal, we need to subtract the interest from the payment. The interest on the first payment will be 15% of $80,000, or $12,000. So the amount of the first payment that goes towards the principal is $21,139 - $12,000 = $9,139.

Therefore, after the first payment is made, the principal balance of the mortgage is $80,000 - $9,139 = $70,861, which is answer choice C.

Question 9

On January 1,2015,Bratios Company purchases equipment and signs a 6-year mortgage note for $80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2016.Calculate the portion of interest expense paid on the third installment.(Round your answer to nearest whole number.)

Accepted Answer

To calculate the portion of interest expense on the third installment, we need to first find the outstanding balance at the beginning of the third year. Since the mortgage note was for $80,000, the outstanding balance at the beginning of year 3 would be:

Outstanding balance at the beginning of year 3 = $80,000 - $21,139 - $21,139 = $37,722

Now we need to calculate the interest expense on this outstanding balance. Since the interest rate is 15%, the interest expense for the year would be:

Interest expense = 15% x $37,722 = $5,658.30

Therefore, the portion of interest expense paid on the third installment would be:

Portion of interest expense = $5,658.30 - ($21,139 - $5,658.30) = $9,053 (rounded to the nearest whole number)

So, the best choice is B, which is $9,053.

Question 10

On January 1,2015,Anderson Tools Company purchases property of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.Anderson will make yearly payments of $46,072.Prepare the amortization schedule for the first five payments.(Round your answers to the nearest dollar.)

Accepted Answer

The answer of On January 1,2015,Anderson Tools Company purchases property...

Question 11

If a bond is issued at a premium,it will sell for more than face value.

Accepted Answer

A bond issued at a premium means that the issue price is higher than the face value, so it will sell for more than face value.

Question 12

On January 1,2015,Anderson Tools Company purchases property of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.The amortization schedule shows that the company will pay $46,072 per year.Journalize the first yearly payment on January 1,2016.

Accepted Answer

The answer of On January 1,2015,Anderson Tools Company purchases property...

Question 13

On January 1,2013,Anderson Tools Company purchases machinery with a fair value of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.On January 1,2013,what will be the journal entry?

Accepted Answer

The answer of On January 1,2013,Anderson Tools Company purchases machinery...

Question 14

Hernandez Carpets Company buys a building on a plot of land for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%.The payment will be made in equal monthly installments of $809.Provide the journal entry for the first monthly payment.(Round your answers to nearest whole dollar number.)

Accepted Answer

The answer of Hernandez Carpets Company buys a building on...

Question 15

If a bond is issued at a discount,it will sell for more than face value.

Accepted Answer

If a bond is issued at a discount, it means it is sold for less than its face value. Therefore, it will sell for less than face value.

Question 16

On the maturity date,the bondholder is paid the face amount of the bond plus the last interest payment.

Accepted Answer

This statement is true. On the maturity date, the bondholder is paid the face value of the bond (the initial amount borrowed) plus the final interest payment.

Question 17

In order to expand business,the management of Vereos Inc.decided to issue long-term notes payable for $50,000.The note will be paid over ten years with payments of $5,000 plus 12% interest.Provide the journal entry needed after one year for the first installment payment.

Accepted Answer

The answer of In order to expand business,the management of...

Question 18

On January 1,2015,Bratios Company purchased equipment and signed a 6-year mortgage note for $80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2016.On January 1,2016,the journal entry to record the first installment payment will include a ________.

Accepted Answer

The first installment payment includes both principal and interest. The interest for the first year is calculated as $80,000 x 15% = $12,000. Therefore, the journal entry should include a debit to Interest Expense for $12,000, a debit to Mortgage Payable for the portion of the payment that goes towards reducing the principal ($21,139 - $12,000 = $9,139), and a credit to Cash for $21,139.

Question 19

Hernandez Carpets Company buys a building on a plot of land for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%.Provide the journal entry for the purchase.

Accepted Answer

The answer of Hernandez Carpets Company buys a building on...

Question 20

On April 1,2015,Nurix Manufacturers purchases equipment for $100,000,paying $30,000 in cash and signing a 10-year mortgage for $70,000 taken out at 8%.Prepare the journal entry to record the acquisition of the equipment.

Accepted Answer

The answer of On April 1,2015,Nurix Manufacturers purchases equipment for...

Quiz 12: Long-Term Liabilities

On April 1,2015,Ardos Gardening Products borrowed $100,000 on a 15%,10-year note with annual installment payments of $10,000 plus interest due on April 1 of each succeeding year.Provide the first journal entry for the issuance of the note.

On January 1,2015,Bratios Company purchases equipment and signs a 6-year mortgage note for $80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2016.Calculate the portion of principal amount paid on the third installment.

In order to expand business,the management of Vereos Inc.decided to issue long-term notes payable for $50,000.The instrument carries interest at the rate of 12% with 10 equal yearly installments,beginning in one year.What will be the journal entry at the inception?

On April 1,2015,Ardos Gardening Products borrowed $100,000 on a 15%,10-year note with annual installment payments of $10,000 plus interest due on April 1 of each succeeding year.Provide the journal entry for the first installment payment made on April 1,2016.

Bonds are short-term debt issued to multiple lenders called bondholders,usually in increments of $1,000.

On January 1,2015,Paramount Inc.issued long-term notes payable for $50,000.The note will be paid over ten years with payments of $5,000 plus 12% interest due each January 1,beginning January 1,2016.Prepare the amortization schedule for the first three payments.

On May 1,2015,Vantage Services issued a long-term note payable for $35,000.It is payable over a 5-year term in $7,000 annual principal payments plus interest,on May 1 of each year beginning on May 1,2016.Provide the initial journal entry for the issuance of the note.

On January 1,2015,Bratios Company purchases equipment and signs a 6-year mortgage note for $80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2016.Calculate the balance of the Mortgage Payable account after the payment of the first installment.

If a bond is issued at a premium,it will sell for more than face value.

On January 1,2015,Anderson Tools Company purchases property of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.The amortization schedule shows that the company will pay $46,072 per year.Journalize the first yearly payment on January 1,2016.

On January 1,2013,Anderson Tools Company purchases machinery with a fair value of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.On January 1,2013,what will be the journal entry?

If a bond is issued at a discount,it will sell for more than face value.

On the maturity date,the bondholder is paid the face amount of the bond plus the last interest payment.

In order to expand business,the management of Vereos Inc.decided to issue long-term notes payable for $50,000.The note will be paid over ten years with payments of $5,000 plus 12% interest.Provide the journal entry needed after one year for the first installment payment.

On January 1,2015,Bratios Company purchased equipment and signed a 6-year mortgage note for $80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2016.On January 1,2016,the journal entry to record the first installment payment will include a ________.

Hernandez Carpets Company buys a building on a plot of land for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%.Provide the journal entry for the purchase.

On April 1,2015,Nurix Manufacturers purchases equipment for $100,000,paying $30,000 in cash and signing a 10-year mortgage for $70,000 taken out at 8%.Prepare the journal entry to record the acquisition of the equipment.