Question: Time crunch - please help me solve these questions (and show the math)!!! 1. On February 15, Cancun Co. paid $120,000 cash to purchase American
Time crunch - please help me solve these questions (and show the math)!!!
1.
On February 15, Cancun Co. paid $120,000 cash to purchase American General's 90-day short-term notes at par, which are dated February 15 and pay 10% interest (classified as held-to-maturity). The journal entry to record this transaction would include a:
| Debit Cash for $120,000; credit to Short -Term Investments - HTM $120,000. | ||||||||||||||||||||||||||||||||||||||
| Debit Long-Term Investments - HTM $144,000; credit to Interest Revenue $24,000; credit Cash $120,000. | ||||||||||||||||||||||||||||||||||||||
| Debit Debt Investments - HTM $120,000; credit Cash $120,000. | ||||||||||||||||||||||||||||||||||||||
| Debit Cash for $120,000; credit Debt Investments - HTM $120,000.
2. On May 2, Cara Co. received a check from Alyse General in payment of the principle and 45 day's interest on a $132,000, 45-day short-term note purchased on March 18. The interest rate on the note was 10%. The journal entry Cara Co. would make to record receipt of payment of the principle and interest on May 2 would include a:
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