Set A 567 3 Purchased a vehicle for $28,000 from Auto Dealer Ltd, to transport d

Question

Set A 567 3 Purchased a vehicle for $28,000 from Auto Dealer Ltd, to transport dlients to nearby dimbing sites. Paid $8,000 as a down payment and borrowed the remainder from Atlantic Bank for 12 months at 3%. Interest is payable quarterly, at the end of each quarter. Recorded accrued interest for the Black Diamond note and the Montpelier and tlantic loans. Record the above transactions. enter any opening balances. Post the above entries. presentation of interest expense for the year ended December 31. accounts for the Interest Expense, Interest Payable, Bank Loans Payable, and Notes Payable accounts and ng there is no other interest expense than that recorded in the transactions above, show the income statement (c) Assumi (d) Sho w the current liability section of the statement of financial position as at December 31, listing balances of accounts affected by the above transactions. P10-3A On September 30, 2017, Coldwater Corporation purchased equipment for s1.1 million. The equipment was Record instalmes purchased with a $100,000 down payment and a three-year 4%, si million bank loan for the balance The terms provide tor payment of the bank loan with quarterly fixed principal payments of $83,333, plus interest, starting on Coldwater has a November 30 year end and records adjusting entries annually Instructions December 31 Record the purchase of equipment on September 30, 2017. Record the accrual of interest expense on November 30, 2017. Round to the nearest dollar. Record the first two instalment payments, on December 31, 2017, and March 31, 2018. Round all amounts to the nearest dollar Repeat parts (b) and (c) assuming that the terms provide for quarterly blended principal and interest payments of $88,849, rather than fixed principal payments of $83,333, plus interest. (a) (b) (c) (d) P10-4A Starlight Graphics Ltd. signed a 10-year, 6.5%, $700,000 mortgage on June 30, 2017, to help finan research laboratory. The mortgage terms provide for semi-annual blended principal and interest payments of $48,14 Payments are due on December 31 and June 30. The company's year end is june 30. 5. pa ructions (a) Prepare an instalment payment schedule for the first two years. (b) Record the receipt of the mortgage loan on June 30, 2017. Round all amounts to the nearest dollar n inetalment nayments on December 31, 2017, and June 30, 2018.

Explanation / Answer

a) 30 sep 2017 Equipment a/c Dr $ 1100000

To Cash/Bank a/c $100000

To Bank loan a/c $1000000

(Being Equipment purchased with downpayment $100000 and taken bank loan for balance payment for 4% int to be repaid in quarterly fixed installments of $83333 plus interest for three years)

b) Nov 30 2017 Interest calc= 1000000×4/100×2/12=6667

Interest expense a/c Dr 6667

To Interest exp payable a/c 6667

(Being int for first 2 months recorded)

C) 31 st Dec 2017 Interest exp a/c Dr 3333

To Int payablea/c 3333

(Being int recorded for Dec 2017)

31Dec 2017 Interest payable a/c Dr 10000

Bank loan a/c Dr 83333

To Cash/Bank a/c 93333

(Being first installment along with int paid)

Interest calc =(1000000-83333)×4/100×3/12=9167

31 Mar 2018 Int exp a/c Dr 9167

Bank loan a/c Dr 83333

To cash/bank a/c 92500

(Being mar installment along with int paid)

d) b entry will be same and c first entry will be same as above

31 st Dec 2017 Interest payable a/c Dr 10000

Bank loan a/c Dr 78849

To Bank /Cash a/c 88849

( Being installment of $88849 which is blended with int been paid)

31st Mar 2018 Int cal= (1000000-78849)×4/100×3/12=9212

Int exp a/c Dr 9212

Bank loan a/c Dr 79637

To Bank/ Cash a/c 88849

(Being Mar 18 installment of $ 88849 paid)

  

  

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.