At January 1, 2021, Han Merchants had a balance in the Interest Payable account for several notes
Question:
At January 1, 2021, Han Merchants had a balance in the Interest Payable account for several notes it had signed and given to suppliers in exchange for outstanding accounts payable. The following table contains the details of the notes payable and the balance of the interest accrued on each note as at the end of the last fiscal year, December 31, 2020.
Supplier | Note Principal | Interest Rate | Issue Date | Term | Interest Accrued | |||||||||
1 | Tessier Inc. | $5,700 | 4% | Nov. 1 2020 | 3 months | $38.00 |
2 | Wolde Inc. | 6,300 | 4.5% | Nov. 30, 2020 | 5 months | $23.63 |
3 | Deng Inc. | 9,300 | 5% | Dec. 1, 2020 | 1 year | 38.75 |
Total $100.38
All notes require that the interest be paid at the maturity of the note. All notes and interest were paid on time. Han prepares adjusting entries at the end of its calendar fiscal year.
Additional transactions of 2021:
Mar. 1 | Signed a $11,700, one-year, 4% note to Lalonde Ltd. in settlement of an accounts payable. Interest is due at maturity. | |
Oct. 30 | Signed a $4,200, three-month, 4.5% note to Hanover Ltd. in settlement of an accounts payable. Interest is due at maturity. | |
Nov. 30 | Borrowed from RBC $11,100 cash in exchange for a two-year 5% note with interest due at maturity. |
1. What will be the amounts and classifications that will appear on Han’s balance sheet at December 31, 2021, concerning the notes payable?
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson