How would you put this in an amortization table? On August 1, 2022, Nelson Corp. sold inventory in exchange for a 2-year non-interest-bearing note having a face value of $26,000. The present value of this note has already been determined to be $20,727.
12% is a reasonable cost of borrowing for non-interest-bearing notes of this nature. The note’s face value will be paid back on August 1, 2024. Nelson Corp. has a calendar year-end, uses the effective interest method, and uses the periodic inventory system.
How would you put this in an amortization table? On August 1, 2022, Nelson Corp. sold inventory in exchange for a 2-year non-interest-bearing note having a face value of $26,000. The present value of this note has already been determined to be $20,727.
12% is a reasonable cost of borrowing for non-interest-bearing notes of this nature. The note’s face value will be paid back on August 1, 2024. Nelson Corp. has a calendar year-end, uses the effective interest method, and uses the periodic inventory system.
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Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017.
2016
| Apr. | 20 | Purchased $39,500 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 $4,500 in cash. | ||
| July | 8 | Borrowed $63,000 cash from NBR Bank by signing a 120-day, 11% interest-bearing note with a face value of $63,000. | ||
| __?__ | Paid the amount due on the note to Locust at the maturity date. | |||
| __?__ | Paid the amount due on the note to NBR Bank at the maturity date. | |||
| Nov. | 28 | Borrowed $36,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a face value of $36,000. | ||
| Dec. | 31 | Recorded an adjusting entry for accrued interest on the note to Fargo Bank. | ||
2017
| __?__ | Paid the amount due on the note to Fargo Bank at the maturity date. |
5.1 Prepare journal entries for all the preceding transactions and events for 2016. (Do not round your intermediate calculations.)
Journal entry worksheet
Transaction Index :
Purchased $39,500 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpetual inventory system.
Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 7% annual interest along with paying $4,500 in cash.
Borrowed $63,000 cash from NBR Bank by signing a 120-day, 11% interest-bearing note with a face value of $63,000.
Paid the amount due on the note to Locust at the maturity date.
Paid the amount due on the note to NBR Bank at the maturity date.
Borrowed $36,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a face value of $36,000.
Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Note: Enter debits before credits.
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Note: Enter debits before credits.
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Borrowed $63,000 cash from NBR Bank by signing a 120-day, 11% interest-bearing note with a face value of $63,000. Paid the amount due on the note to Locust at the maturity date. Paid the amount due on the note to NBR Bank at the maturity date. Borrowed $36,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a face value of $36,000. Recorded an adjusting entry for accrued interest on the note to Fargo Bank. Note: Enter debits before credits.
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