On November 1, Year 1, Noble Co. borrowed $116,000 from South Bank and signed a
ID: 2482567 • Letter: O
Question
On November 1, Year 1, Noble Co. borrowed $116,000 from South Bank and signed a 6%, six-month note payable, all due at maturity. The interest on this loan is stated separately.
$116,000.
$119,480.
$117,740.
$122,960.
$6,960.
$2,320.
$3,480.
$1,740.
$116,000.
$118,320.
$119,480.
$117,160.
Credit to Cash for $2,320.
Debit to Interest Expense for $2,320.
Credit to Notes Payable for $1,160.
Credit to Interest Payable for $1,160.
How much must Noble pay South Bank on May 1, Year 2, when the note matures?Explanation / Answer
How much must Noble pay South Bank on May 1, Year 2, when the note matures?
=116000*(1+6%/2) = 119480
How much interest expense will Noble recognize on this note in Year 2?
=116000*6%*4/12 = 2320
At December 31, Year 1, Noble Co.'s overall liability for this loan amounts to:
=116000+116000*6%*2/12=117160
At December 31, Year 1, the adjusting entry with respect to this note includes a:
Credit to Interest Payable for $1,160
How much must Noble pay South Bank on May 1, Year 2, when the note matures?
=116000*(1+6%/2) = 119480
How much interest expense will Noble recognize on this note in Year 2?
=116000*6%*4/12 = 2320
At December 31, Year 1, Noble Co.'s overall liability for this loan amounts to:
=116000+116000*6%*2/12=117160
At December 31, Year 1, the adjusting entry with respect to this note includes a:
Credit to Interest Payable for $1,160
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