Homework Answers
Amount bank charges in the discounting process: Bank
discount
Rate bank charges in the discounting process: Bank discount
rate
Number of days bank will wait for its money in the discount
process: Discount period
True rate of interest: Effective rate
The principal: Face value
Maturity value greater than original note: Interest-bearing
note
Ability to borrow quickly: Line of credit
Signs the note: Maker
Due date: Maturity date
Cash paid on due date: Maturity value
Maturity value minus bank discount: Proceeds
A written promise: Promissory note
Bank deducts interest in advance: Simple discount
note
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Match the following terms with their definitions Chicoed 1 Amount bank charges in the discounting process...
Descriptors are provided below for six situations involving notes receivable being discounted at a bank. In...
Descriptors are provided below for six situations involving
notes receivable being discounted at a bank. In each case, the
maturity date of the note is December 31, 2018, and the principal
and interest are due at maturity. For each, determine the proceeds
received from the bank on discounting the note. (Do not
round intermediate calculations. Round your final answers to the
nearest whole dollar.)
Note Date of Note Discount Rate 12% Proceeds Received 12% Note Face Value 60,000 60,000 60,000...
Terms and Definitions The interest rate paid on the face amount of a bond is called...
Terms and Definitions The interest rate paid on the face amount of a bond is called the contract rate of interest. The interest rate paid on similar risk bonds is called the market rate of interest. When the contract rate of interest is less than the market rate of interest, the bonds will sell for less than their face value. The difference between the selling price and the face amount of the bonds in this case is called a discount...
Match the following definitions with the terms below: 45. The stated interest rate is more than...
Match the following definitions with the terms below: 45. The stated interest rate is more than the market interest rate. 46. The stated interest rate is less than the market interest rate. 47. The rate quoted in the bond contract used to calculate the cash payments for interest. 48. The stated interest rate equals the market interest rate 49. The true interest rate used by investors to value a bond. 50. The mixture of liabilities and stockholders' equity a business...
Match each description to the appropriate term (a-h). The party promising to pay a note 1....
Match each description to the appropriate term (a-h). The party promising to pay a note 1. Face amount The amount due that must be paid at the due date of a note receivable 2. Term The stated rate charged for using the money of another party 3. Interest The dollar amount stated on a promissory note 4. Maturity value The time between the date a note is issued and the due date of the note 5. Dishonored note 6. Maker...
40. A note on which no rate of interest is specified is atn) market-rate note interest-bearing...
40. A note on which no rate of interest is specified is atn) market-rate note interest-bearing note. non-interest-bearing note variable note b. d. rses a note and transfers it to a bank, the process is callerd discounting a note receivable. b. cosigning a note receivable. collecting a note receivable dishonoring a note receivable. person who promises to pay a certain amount of money at a definite future time is caliled the b. c. discounter of the note. 42. The maker...
Recording Entries for the Discounting of a Note Receivable Aerobic Sports Company completed the following 2020...
Recording Entries for the Discounting of a Note
Receivable
Aerobic Sports Company completed the following 2020 transactions
related to a note receivable.
Prepare the journal entries, including any interest earned, that
Aerobic Sports Company should make on February 1, 2020, and March
1, 2020.
Note: Round your answers to the nearest whole
dollar.
a. February 1, 2020—Received a $520,000, 9%, interest-bearing,
six-month note from Temple Company for land that had a carrying
value of $156,000.
. INILUTY LULU ILIVU T...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate wi...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
L. (10 Points) Match each of the following terms with the appropriate definitions. A. Principles of...
L. (10 Points) Match each of the following terms with the appropriate definitions. A. Principles of internal control B. Cash Over and Short C. Net method D. Voucher system E. Bank reconciliation F. Liquidity G. Receiving report H. Days' sales uncollectecd I. Purchase order J. Gross method 1. 2. 3. A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement. A set of procedures and approvals designed...
Problem 11-1A Short-term notes payable transactions and entries LO P1 [The following information applies to the...
Problem 11-1A Short-term notes payable transactions and
entries LO P1
[The following information applies to the questions
displayed below.]
Tyrell Co. entered into the following transactions involving
short-term liabilities in 2016 and 2017.
2016
Apr.
20
Purchased $35,500 of merchandise on credit from Locust, terms
n/30. Tyrell uses the perpetual inventory system.
May
19
Replaced the April 20 account payable to Locust with a 90-day,
$35,000 note bearing 7% annual interest along with paying $500 in
cash.
July
8
Borrowed...
Match the following terms with the description below. Annuity Compound interest [Choose ] ✓ A series...
Match the following terms with the description below. Annuity Compound interest [Choose ] ✓ A series of equal payments made over equal time periods. The amount of money that accumulates at some future date as a result of making equal payments over equal intervals of time and The amount of money that, if invested at some rate of interest today, will generate a set number of equal periodic payments that are made The process of adding interest to principal for...
Descriptors are provided below for six situations involving
notes receivable being discounted at a bank. In each case, the
maturity date of the note is December 31, 2018, and the principal
and interest are due at maturity. For each, determine the proceeds
received from the bank on discounting the note. (Do not
round intermediate calculations. Round your final answers to the
nearest whole dollar.)
Note Date of Note Discount Rate 12% Proceeds Received 12% Note Face Value 60,000 60,000 60,000...
Terms and Definitions The interest rate paid on the face amount of a bond is called the contract rate of interest. The interest rate paid on similar risk bonds is called the market rate of interest. When the contract rate of interest is less than the market rate of interest, the bonds will sell for less than their face value. The difference between the selling price and the face amount of the bonds in this case is called a discount...
Match the following definitions with the terms below: 45. The stated interest rate is more than the market interest rate. 46. The stated interest rate is less than the market interest rate. 47. The rate quoted in the bond contract used to calculate the cash payments for interest. 48. The stated interest rate equals the market interest rate 49. The true interest rate used by investors to value a bond. 50. The mixture of liabilities and stockholders' equity a business...
Match each description to the appropriate term (a-h). The party promising to pay a note 1. Face amount The amount due that must be paid at the due date of a note receivable 2. Term The stated rate charged for using the money of another party 3. Interest The dollar amount stated on a promissory note 4. Maturity value The time between the date a note is issued and the due date of the note 5. Dishonored note 6. Maker...
40. A note on which no rate of interest is specified is atn) market-rate note interest-bearing note. non-interest-bearing note variable note b. d. rses a note and transfers it to a bank, the process is callerd discounting a note receivable. b. cosigning a note receivable. collecting a note receivable dishonoring a note receivable. person who promises to pay a certain amount of money at a definite future time is caliled the b. c. discounter of the note. 42. The maker...
Recording Entries for the Discounting of a Note
Receivable
Aerobic Sports Company completed the following 2020 transactions
related to a note receivable.
Prepare the journal entries, including any interest earned, that
Aerobic Sports Company should make on February 1, 2020, and March
1, 2020.
Note: Round your answers to the nearest whole
dollar.
a. February 1, 2020—Received a $520,000, 9%, interest-bearing,
six-month note from Temple Company for land that had a carrying
value of $156,000.
. INILUTY LULU ILIVU T...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
L. (10 Points) Match each of the following terms with the appropriate definitions. A. Principles of internal control B. Cash Over and Short C. Net method D. Voucher system E. Bank reconciliation F. Liquidity G. Receiving report H. Days' sales uncollectecd I. Purchase order J. Gross method 1. 2. 3. A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement. A set of procedures and approvals designed...
Problem 11-1A Short-term notes payable transactions and
entries LO P1
[The following information applies to the questions
displayed below.]
Tyrell Co. entered into the following transactions involving
short-term liabilities in 2016 and 2017.
2016
Apr.
20
Purchased $35,500 of merchandise on credit from Locust, terms
n/30. Tyrell uses the perpetual inventory system.
May
19
Replaced the April 20 account payable to Locust with a 90-day,
$35,000 note bearing 7% annual interest along with paying $500 in
cash.
July
8
Borrowed...
Match the following terms with the description below. Annuity Compound interest [Choose ] ✓ A series of equal payments made over equal time periods. The amount of money that accumulates at some future date as a result of making equal payments over equal intervals of time and The amount of money that, if invested at some rate of interest today, will generate a set number of equal periodic payments that are made The process of adding interest to principal for...
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