Question 1

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2019.The three-year, 7% note required annual payments of $571,575 beginning May 31, 2020.The total amount of interest to be paid over the life of the loan is

Accepted Answer

The answer of Sielert Corporation borrowed $1,500,000 from National Bank...

Question 2

Fornelli Corporation borrowed $800,000 from Central Bank on May 31, 2019.The three-year, 7% note required annual payments of $304,840 beginning May 31, 2020.The total amount of interest to be paid over the life of the loan is

Accepted Answer

The answer of Fornelli Corporation borrowed $800,000 from Central Bank...

Question 3

Wolford Company borrowed $2,000,000 from U.S.Bank on January 1, 2019, in order to expand its mining capabilities.The five-year note required annual payments of $520,872 and carried an annual interest rate of 9.5%.What is the amount of expense Wolford must recognize on its 2020 income statement?

Accepted Answer

The correct answer is B: $158,567.The amount of expense Wolford must recognize on its 2020 income statement is the interest expense for the year, which is calculated as the face amount of the note multiplied by the annual interest rate. In this case, the face amount of the note is $2,000,000 and the annual interest rate is 9.5%, so the interest expense for the year is $2,000,000 * 9.5% = $190,000. However, since the note was issued on January 1, 2019, only 11 months of interest expense will be recognized in 2020. Therefore, the amount of expense Wolford must recognize on its 2020 income statement is $190,000 * 11/12 = $158,567.

Question 4

Fornelli Corporation borrowed $800,000 from Central Bank on May 31, 2019.The three-year, 7% note required annual payments of $304,840 beginning May 31, 2020.Interest expense for the year ended December 31, 2019, was

Accepted Answer

Interest expense for the year ended December 31, 2019, is calculated as follows:Interest expense = Principal x Interest rate x TimeInterest expense = $800,000 x 7% x 7/12Interest expense = $32,667

Question 5

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2019.The three-year, 7% note required annual payments of $571,575 beginning May 31, 2020.Interest expense for the year ended December 31, 2019, was

Accepted Answer

The answer of Sielert Corporation borrowed $1,500,000 from National Bank...

Question 6

Wolford Company borrowed $2,000,000 from U.S.Bank on January 1, 2019 in order to expand its mining capabilities.The five-year note required annual payments of $520,872 and carried an annual interest rate of 9.5%.What is the balance in the notes payable account at December 31, 2020, after the annual payment?

Accepted Answer

The correct answer is B. The balance in the notes payable account at December 31, 2020, after the annual payment is $1,306,823. This is because the annual payment of $520,872 reduces the principal balance of the loan by $420,000 ($520,872 - $100,872). The remaining balance of $1,580,000 is then subject to interest expense of $150,800 ($1,580,000 x 9.5%). This interest expense reduces the principal balance by $50,800 ($150,800 - $100,000), resulting in a balance of $1,306,823.

Quiz 10: Reporting and Analyzing Liabilities

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2019.The three-year, 7% note required annual payments of $571,575 beginning May 31, 2020.The total amount of interest to be paid over the life of the loan is

Fornelli Corporation borrowed $800,000 from Central Bank on May 31, 2019.The three-year, 7% note required annual payments of $304,840 beginning May 31, 2020.The total amount of interest to be paid over the life of the loan is

Wolford Company borrowed $2,000,000 from U.S.Bank on January 1, 2019, in order to expand its mining capabilities.The five-year note required annual payments of $520,872 and carried an annual interest rate of 9.5%.What is the amount of expense Wolford must recognize on its 2020 income statement?

Fornelli Corporation borrowed $800,000 from Central Bank on May 31, 2019.The three-year, 7% note required annual payments of $304,840 beginning May 31, 2020.Interest expense for the year ended December 31, 2019, was

Sielert Corporation borrowed $1,500,000 from National Bank on May 31, 2019.The three-year, 7% note required annual payments of $571,575 beginning May 31, 2020.Interest expense for the year ended December 31, 2019, was