- June 2: Check # 5002 was used to make a down payment of $33,000.00 on additional...
Question:
- June 2: Check # 5002 was used to make a down payment of $33,000.00 on additional computer equipment that was purchased from Royce Computers, invoice number 76542. The full price of the computer was $165,000.00. A five-year note was executed by Byte for the balance. Answer: (132,000)
- June 10: Check # 5003 was used to make a $25,250.00 payment reducing the principal owed on the June 2 purchase of computer equipment from Royce Computers.
(Main Question)
The note payable to Royce Computers is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year. [IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $132,000.00. On June 10, eight days later, $25,250.00 was repaid.
Interest expense must be calculated on the $132,000.00 for eight days.
In addition, interest expense on the $106,750.00 balance of the loan ($132,000.00 less $25,250.00 = $106,750.00) must be calculated for the 20 days remaining in the month of June.]
College Accounting A Contemporary Approach
ISBN: 978-0077639730
3rd edition
Authors: David Haddock, John Price, Michael Farina