Chapter 8 and 9 Homework

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Score: 100

out of 100 points (100%)

1.

award:

5 out of 5.00 points On November 1, Bahama Cruise Lines borrows $3 million and issues a six month, 6% note payable. Interest is payable at maturity. Record the issuance of the note and the appropriate adjustment for interest expense at December 31, the end of the reporting period. (Enter your answers in dollars not in millions. Do not round intermediate calculations. Omit the "$" sign in your response.) Date Nov. 1 General Journal Cash Notes payable Debit 3,000,000 Credit 3,000,000 30,000 30,000

Dec. 31 Interest expense Interest payable

Worksheet

Learning Objective: 08-02 Account for notes payable and interest expense.

On November 1, Bahama Cruise Lines borrows $3 million and issues a six month, 6% note payable. Interest is payable at maturity. Record the issuance of the note and the appropriate adjustment for interest expense at December 31, the end of the reporting period. (Enter your answers in dollars not in millions. Do not round intermediate calculations. Omit the "$" sign in your response.) Date Nov. 1 General Journal Cash Notes payable Dec. 31 Interest expense Interest payable 30,000 30,000 Debit 3,000,000 Credit 3,000,000

Explanation: Interest expense = 3,000,000 × .06 × 2/12 = 30,000

2.

award:

5 out of 5.00 points On November 1, Bahama National Bank lends $3 million and accepts a six month, 6% note receivable. Interest is due at maturity. Record the acceptance of the note and the appropriate adjustment for interest revenue at December 31, the end of the reporting period. (Enter your answers in dollars not in millions. Do not round intermediate calculations. Omit the "$" sign in your response.) Date Nov. 1 General Journal Notes receivable Cash Debit 3,000,000 Credit 3,000,000 30,000 30,000

Dec. 31 Interest receivable Interest revenue

Worksheet

Learning Objective: 08-02 Account for notes payable and interest expense.

On November 1, Bahama National Bank lends $3 million and accepts a six month, 6% note receivable. Interest is due at maturity. Record the acceptance of the note and the appropriate adjustment for interest revenue at December 31, the end of the reporting period. (Enter your answers in dollars not in millions. Do not round intermediate calculations. Omit the "$" sign in your response.) Date Nov. 1 General Journal Notes receivable Cash Dec. 31 Interest receivable 30,000 Debit 3,000,000 Credit 3,000,000

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9/28/2012 2:34 AM

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Interest revenue

30,000

Explanation: Interest revenue = 3,000,000 × .06 × 2/12 = 30,000

3.

award:

5 out of 5.00 points On April 1, Online Travel issues $12 million of commercial paper with a maturity on December 31 and an 8% interest rate. Record the issuance of the commercial paper and its repayment at maturity. (Enter your answers in dollars not in millions. Do not round intermediate calculations. Omit the "$" sign in your response.) Date Apr. 1 General Journal Cash Notes payable - commercial paper Notes payable - commercial paper Interest expense Cash Debit 12,000,000 Credit 12,000,000 12,000,000 720,000 12,720,000

Dec. 31

Worksheet

Learning Objective: 08-02 Account for notes payable and interest expense.

On April 1, Online Travel issues $12 million of commercial paper with a maturity on December 31 and an 8% interest rate. Record the issuance of the commercial paper and its repayment at maturity. (Enter your answers in dollars not in millions. Do not round intermediate calculations. Omit the "$" sign in your response.) Date Apr. 1 General Journal Cash Notes payable - commercial paper Dec. 31 Notes payable - commercial paper Interest expense Cash 12,000,000 720,000 12,720,000 Debit 12,000,000 Credit 12,000,000

Explanation: Interest expense = $12,000,000 × .08 × 9/12 = $720,000....
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