Problem 10-13A Grace Herron has just approached a venture capitalist for financi

Question

Problem 10-13A Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $170,000 at an annual interest rate of 5%. The loan is repayable over 5 years in annual installments of $39,266, principal and interest, due each June 30. The first payment is due June 30, 2014. Grace uses the effective-interest method for amortizing debt. Her ski hill company’s year-end will be June 30. Prepare an amortization schedule for the 5 years, 2013–2018. (Round answers to 0 decimal places, e.g. 125.) Period Cash Payment Interest Expense Principal Reduction Balance July 1, 2013 $ $ $ $ June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 * * Amount may be off due to rounding. SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare all journal entries for Grace Herron for the first 2 fiscal years ended June 30, 2014, and June 30, 2015. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1/13 June 30/14 June 30/15 SHOW LIST OF ACCOUNTS LINK TO TEXT Show the balance sheet presentation of the note payable as of June 30, 2015. (Hint: Be sure to distinguish between the current and long-term portions of the note.) (Round answers to 0 decimal places, e.g. 125.) GRACE HERRON Balance Sheet (Partial) June 30, 2015 $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Explanation / Answer

a) Amortisation table

Journal entries:

Balance Sheet

Current liabiltiies

Current portion of 5% notes payable                                                  $32,304

Long term liabilities:

5% notes payable ,due in 2018                                                           $106,930

Total liabilities                                                                                     $139,234           

Period Cash payment interest Principal Reduction Balance 1-july -13 $0 $0 $0 $170,000 30 june 14 $39,266 $8,500 $30,766 $139,234 30 june 15 $39,266 $6962 $32,304 $106,930 30 june 16 $39,266 $5347 $33,919 $73,011 30 june 17 $39,266 $3651 $35,615 $37,396 30 june 18 $39,266 $1870 $37,396 $0

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