1. Note Receivable: On Jan 1 st , 2014, Xena Inc. provi ded services in exchange
ID: 2556272 • Letter: 1
Question
1. Note
Receivable:
On Jan 1
st
, 2014, Xena Inc.
provi
ded services in exchange for a 2
-year $100,000, 8% note
receivable that pays interest quarterly on March 31
st
, June 30
th
, September 30
th
and Dec 31
st
.
The customer’s normal borrowing rate
(market rate)
is 12%.
On, Jan 1
st
, 2014, the carrying
value of the note receivable is $___________ Round to the
nearest dollar.
a.
Prepare a well
-labeled
schedule
(with debits/credits shown) for the journal entries
through the life of the Note.
b.
Prepare the original Journal Entry to record the issue of the
No
te Receivable
c.
Prepare the Journal Entry to record the Interest on 12/31/15 for the
Note Receivable
2. Bond
Payable
:
On 7/1/14, Sasha issued
$ 2,000,000 12% bonds, maturing in 5 years with a yield of 10%,
compounded semi
-annually. The bonds pay interest semi
-annually on June 30 and December 31
of each year. The bonds are to be accounted for under the effective interest method. Round to
the n
earest dollar.
At what amount were the bonds issued? __________
a.
Prepare a well
-labeled
schedule
(with debits/credits shown) for the journal entries
through the life of the Bond.
b.
Prepare the original Journal Entry to record the issue of the
Bond
c.
Prepare the Journal Entry to record the 12/31/15 Interest related to the
Bond
Explanation / Answer
As per Chegg Policy, we are supposed to answer maximum of one question at a time.
Thank You.
Requirement 1 The carrying value of Notes Receivable is 92980.30781 Requirement 2 Notes Receivable amortization schedule using effective interest method Period Interest Payment PVIF@3% Present worth of Note Receivable Interest Income@3% Amortization of discount Amortized discount balance Notes Receivable Face Value Book value of Notes receivable January 1, 2014 -100000 1 7019.6922 100000 92980.31 Debit Cash Credit Interest Income Debit Discount on notes receivable March 31, 2014 2000 0.9708738 1941.74757 2789.409234 789.4092343 6230.283 100000 93769.72 June 30, 2014 2000 0.9425959 1885.19182 2813.091511 813.0915113 5417.1914 100000 94582.81 September 30, 2014 2000 0.9151417 1830.28332 2837.484257 837.4842567 4579.7072 100000 95420.29 December 31, 2014 2000 0.888487 1776.9741 2862.608784 862.6087844 3717.0984 100000 96282.9 March 31, 2015 2000 0.8626088 1725.21757 2888.487048 888.4870479 2828.6114 100000 97171.39 June 30, 2015 2000 0.8374843 1674.96851 2915.141659 915.1416594 1913.4697 100000 98086.53 September 30, 2015 2000 0.8130915 1626.18302 2942.595909 942.5959091 970.87379 100000 99029.13 December 31, 2015 2000 0.7894092 1578.81847 2970.873786 970.8737864 0 100000 100000 December 31, 2015 100000 0.7894092 78940.9234 100000 116000 92980.3078 Requirement 3 Date General Journal Debit Credit January 1, 2014 Notes Receivable 100000 Discount on notes receivable 7019.69 Cash 92980.31 To record the issuance of Notes receivable Requirement 4 December 31, 2015 Cash 2000.00 Discount on notes receivable 970.87 Interest Revenue 2970.87 To record the interest RevenueRelated Questions
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