value: 10.00 points On March 1, 2014, Peppers Deli loaned $14,000 to Simms Suppl

Question

value: 10.00 points On March 1, 2014, Peppers Deli loaned $14,000 to Simms Supply for one year at 10 percent interest. Required Answer the following questions. a. What is Peppers interest income for 2014? (Do not round intermediate calculations and round your final answer to nearest whole dollar amount. Interest income b. What is Peppers total amount of receivables at December 31, 2014? (Do not round intermediate calculations and round your final answer to nearest whole dollar amount.) Total eceivables c. What amounts will be reported on Peppers 2014 statement of cash flows? (Enter cash outflows as negative amounts.)

Explanation / Answer

Req a: Loan amount: 14000 Loan date: 1-Mar Rate of interest: 10% Interest income for 2014 (for 10 months): 14000*10%*10/12 = 1166.67 Req b: Total amount receivables on Dec31, 2014: Loan amount 14000 Add : Interest receivable 1166.67 Total amount receivables on Dec31, 2014: 15166.67 Req c: Cashoutflow of $14,000 as investing activities will be reported in 2014 Req d: Interest income for 2015 (for two months): 14000*10%*2/12 =233.33 Req e: Total amount of cash collected in 2015; Loan 14000 Iinterest receivable of 2014 1166.67 interest income eof 2015 233.33 Total cash to be collected 15400 Req f; Cash flow of 2015: Cashflows from investing Activities: Loan received 14000 Interest received 1400 Net cash inflows from investing activities 15400 Req g: Total amount of interest earned on loan: 14000 *10%: $ 1400

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