On June 30, 2017, Rolf Inc. borrowed $25,000 from its bank, signing an 8%, two-year note. Required

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On June 30, 2017, 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, 2017

December 31, 2018

June 30, 2019

2. Assume instead that the bank charges 8% on the note, which is compounded semiannually. Identify and analyze the effect 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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Using Financial Accounting Information The Alternative to Debits and Credits

ISBN: 978-1337491471

10th edition

Authors: Gary A. Porter, Curtis L. Norton

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Question Posted: Jun 20, 2017 08:44 AM

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On June 30, 2017, Rolf Inc. borrowed $25,000 from its bank, signing an 8%, two-year note. Required

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1 The effect of the adjustment on December 31 can be identified and analyzed as follows T...View the full answer

Using Financial Accounting Information The Alternative to Debits and Credits

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