On June 30, 2012, Rolf Inc. borrowed $25,000 from its bank, signing an 8%, two-year note. Required
Question:
On June 30, 2012, Rolf Inc. borrowed $25,000 from its bank, signing an 8%, two-year note.
Required
1. Assuming that the bank charges simple interest on the note, prepare the journal entry Rolf will record on each of the following dates:
December 31, 2012
December 31, 2013
June 30, 2014
2. Assume instead that the bank charges 8% on the note, which is compounded semiannually. Identify and analyze the effects on the dates in part (1).
3. How much additional interest expense will Rolf have in part (2) than in part (1)?
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Step by Step Answer:
1 The effect of the adjustment on Dec 31 2012 can be identified and analyzed as follows The effect o...View the full answer
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Related Book For 
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1111534912
8th edition
Authors: Gary A. Porter, Curtis L. Norton
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