Exercise 9-168 Effect of a discount note on financial statements (Appendix.) Mar

Question

Exercise 9-168 Effect of a discount note on financial statements (Appendix.) Mark Miller started a moving cash from a local bank by issuing a one-year $80,000 face value note with annual interest basec on a 12 percent discount. During 2016, Miller provided services for $65,400 cash. Required Answer the following questions Record the events in T-accounts prior to answering the questions a. What is the amount of total liabilities on the December 31, 2016, balance sheet? b. What is the amount of net income on the 2016 income statement? .8 company on January 1, 2016. On March 1, 2016, Miller borrowed

Explanation / Answer

Here Discount on notes payable 80000*12/100 =9600

b) Amount of liabilities on Dec,31= fv of notes payable 80000$

c)Calculation of net income durin the year:

Service revenue=65400

Less: Discount write off(9600/12*10months)=8000

Total =65400-8000=57400

D)Cash flow from operating activities:

revenue in cash = 65400

Debit Credit a) cash 70400 Discount on notes payable 9600 Notes payable 80000 b) Cash 65400 Service revenue 65400

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.