Tony’s favorite memories of his childhood were the times he spent with his dad a
ID: 2652645 • Letter: T
Question
Tony’s favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, “I’ve always wanted to start a camp where families could get away and spend some quality time together. If we just had the money, I know this would be the perfect place.” They called several banks and on January 1, 2014, Great Adventures obtained $570,000, 6%, 9-year installment loan from Summit Bank. Monthly payments of $6,843 are required at the end of each month over the life of the 9-year loan. Each monthly payment of $6,843 includes both interest expense and principal payments (i.e., reduction of the loan amount.)
Late that night Tony exclaimed, "$570,000 for our new camp, this has to be the best news ever.” Suzie snuggled close and said, “There’s something else I need to tell you, Tony, I’m expecting!” They decided right then, if it was a boy, they would name him Venture.
1.
value:
10.00 points
Required information
Required:
1.
Complete the first three rows of an amortization table. (Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)
Date Cash
Paid Interest
Expense Decrease in
Carrying
Value Carrying
Value
1/1/14 $
1/31/14 $ $ $
2/28/14
References
eBook & Resources
WorksheetDifficulty: Hard
Check my work
2.
value:
10.00 points
Required information
2.
Record the note payable on January 1, 2014, and the first two payments on January 31, 2014, and February 28, 2014. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan.1, 2014
(Click to select)
Notes payable
Accounts receivable
Interest payable
Interest revenue
Notes receivable
Accounts payable
Interest expense
Cash
(Click to select)
Accounts receivable
Accounts payable
Interest expense
Interest revenue
Notes receivable
Cash
Interest payable
Notes payable
Jan.31, 2014
(Click to select)
Notes payable
Interest expense
Interest revenue
Notes receivable
Accounts payable
Cash
Interest payable
Accounts receivable
(Click to select)
Accounts receivable
Interest payable
Notes receivable
Interest revenue
Notes payable
Cash
Accounts payable
Interest expense
(Click to select)
Accounts payable
Interest expense
Interest payable
Interest revenue
Cash
Accounts receivable
Notes receivable
Notes payable
Feb.28, 2014
(Click to select)
Notes receivable
Interest revenue
Interest payable
Accounts receivable
Interest expense
Notes payable
Accounts payable
Cash
(Click to select)
Interest payable
Notes receivable
Notes payable
Interest expense
Cash
Accounts receivable
Interest revenue
Accounts payable
(Click to select)
Accounts payable
Notes receivable
Interest expense
Notes payable
Accounts receivable
Interest revenue
Cash
Interest payable
References
eBook & Resources
Explanation / Answer
Solution-1
(1)
(2)
(3)
(4)
(5)
Date
Cash Paid
(Face Amount*Stated Rate)
Interest Expense (Carrying Value*Market Rate)
Decrease in Carrying Value
(2-3)
Carrying Value
(Prior Carrying Value -4)
January 1, 2014
January 31, 2014
$6,843
$2,850
($570,000*6%*1 / 12)
$3,993
$566,007
($570,000-$3,993)
February 28, 2014
$6,843
$2,830
($566,007 *6%*1 / 12)
$4,013
$561,994
($566,007-$4,013)
Solution-2
Date
Account Titles and Explanation
Debit
Credit
January 1, 2014
Cash
$570,000
Note Payable
$570,000
(Issuance of a mortgage note payable)
January 31, 2014
Interest Expense ($570,000*6% *1/ 12)
$2,850
Notes Payable (Difference)
$3,993
Cash (Monthly Payment)
$6,843
(Record the first mortgage monthly payment)
February 28, 2014
Interest Expense
$2,830
Notes Payable (Difference)
$4,013
Cash (Monthly Payment)
$6,843
(Record the second mortgage monthly payment)
(1)
(2)
(3)
(4)
(5)
Date
Cash Paid
(Face Amount*Stated Rate)
Interest Expense (Carrying Value*Market Rate)
Decrease in Carrying Value
(2-3)
Carrying Value
(Prior Carrying Value -4)
January 1, 2014
January 31, 2014
$6,843
$2,850
($570,000*6%*1 / 12)
$3,993
$566,007
($570,000-$3,993)
February 28, 2014
$6,843
$2,830
($566,007 *6%*1 / 12)
$4,013
$561,994
($566,007-$4,013)