On November 1, 2013, Edwin Inc. borrowed cash and signed a $60,000, 1-year note payable. Required: 1.

Question:

On November 1, 2013, Edwin Inc. borrowed cash and signed a $60,000, 1-year note payable.

Required:

1. Compute the following items assuming (a) an interest-bearing note at 12%, (b) a non-interest-bearing note discounted at 12%:

a. cash received

b. effective interest rate

c. interest expense for 2013

2. Prepare the journal entries for Edwin under each case for 2013 and 2014.

3. Next Level Why is the effective rate higher for the non-interest-bearing note?

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Related Book For answer-question

Intermediate Accounting Reporting and Analysis

ISBN: 978-1111822361

1st edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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Question Posted: Sep 11, 2016 11:17 AM

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On November 1, 2013, Edwin Inc. borrowed cash and signed a $60,000, 1-year note payable. Required: 1.

Question:

Step by Step Answer:

1 a Cash received 1 Interestbearing 60000 2 Noninterestbearing 60000 x 088 52800 b Effective interest rate 1 Interestbearing 12 2 Noninterestbearing 1...View the full answer

Intermediate Accounting Reporting and Analysis

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