Question: A partial amortization schedule for a five-year note payable that Holly Co. issued on January 1, 2014, is shown here: Accounting Period Principal Balance January
A partial amortization schedule for a five-year note payable that Holly Co. issued on January 1, 2014, is shown here:
| Accounting Period | Principal Balance January 1 | Cash Payment | Applied to Interest | Applied to Principal |
| 2014 | $131,000 | $35,445 | $14,410 | $21,035 |
| 2015 | 109,965 | 35,445 | 12,096 | 23,349 |
References
Section BreakExercise 7-11 Amortization of a long-term loan LO 7-5
6.
Award: 0 out of 2.00 points
Exercise 7-11 Part a
| Required |
| a. | What rate of interest is Holly Co. paying on the note? |
eBook & Resources
eBook: LO 7-5 Show how installment notes affect financial statements.
References
WorksheetDifficulty: 3 Hard
Exercise 7-11 Part aLearning Objective: 07-05 Show how installment notes affect financial statements.
Ask your instructor a question
7.
Award: 0 out of 8.00 points
Exercise 7-11 Part b
| b. | Using a financial statements model like the one shown below, record the appropriate amounts for the following two events. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.) |
| (1) | January 1, 2014, issue of the note payable. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | December 31, 2015, payment on the note payable.
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eBook & Resources
eBook: LO 7-5 Show how installment notes affect financial statements.
References
WorksheetDifficulty: 3 Hard
Exercise 7-11 Part bLearning Objective: 07-05 Show how installment notes affect financial statements.
Ask your instructor a question
8.
Award: 1.98 out of 6.00 points
Exercise 7-11 Part c
| c. | If the company earned $88,600 cash revenue and paid $53,160 in cash expenses in addition to the interest in 2014, what is the amount of each of the following? (Cash outflows should be indicated with a minus sign.)
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eBook & Resources
eBook: LO 7-5 Show how installment notes affect financial statements.
References
WorksheetDifficulty: 3 Hard
Exercise 7-11 Part cLearning Objective: 07-05 Show how installment notes affect financial statements.
Ask your instructor a question
9.
Award: 0 out of 1.00 point
Exercise 7-11 Part d
| d. | What is the amount of interest expense on this loan for 2015? (Round your answers to the nearest whole dollar amount.) |
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