Part A: On April 1, 2018, North Company borrowed $5,000,000 from Samba Bank and signed $5,000,000, 8%, one year notes.

Requirements:

(a) Assuming no other liabilities except the notes, what is the interest expense that the North Company should report on its Dec 31, 2018 income statement? Show your calculation and show how it should be reported in its multistep income statement.

(b) Assuming no other liabilities except the notes, what is the interest payable that the North Company should report on its Dec 31, 2018 balance sheet? Show your calculation and show how it should be reported on its Dec 31, 2018 classified balance sheet.

Part B: January 1, 2018, North Company borrowed $4,761,905 from Samba Bank and signed $5,000,000, one year notes?

Requirements:

(a) What is the notes payable that the North Company should recognize on Jan 1, 2018?

(b) What is the interest rate for the notes payable? Show your calculation.

(c) Assuming no other liabilities except the notes, what is the interest expense that the North Company should report in its Dec 31, 2018 income statement?

Answer rating: 100% (QA)

Part A a Interest Expense 5000000 x 8 x 912 300000 Income Statement Partial Operating ... View the full answer