Scribd
Upload
28 views6 pages

Board Discussion Notes Payable

The document outlines various accounting problems related to notes payable, interest expense, and cash transactions over multiple dates. It includes calculations for interest expenses, discounts on notes, and the present value of notes in different scenarios, including interest-bearing and non-interest-bearing notes. Additionally, it provides a balance sheet and amortization table for specific transactions involving land and machinery purchases.

Uploaded by

c20222981.natuel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
28 views6 pages

Board Discussion Notes Payable

The document outlines various accounting problems related to notes payable, interest expense, and cash transactions over multiple dates. It includes calculations for interest expenses, discounts on notes, and the present value of notes in different scenarios, including interest-bearing and non-interest-bearing notes. Additionally, it provides a balance sheet and amortization table for specific transactions involving land and machinery purchases.

Uploaded by

c20222981.natuel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 6

Problem 1

Nov 1 Cash 8,000,000.00


Notes Payable 8,000,000.00

Dec 31 Interest expense 160,000.00


Interest Payable 160,000.00

July 1 Notes Payable 8,000,000.00


Interest payable 160,000.00
Interest expense 560,000.00
Cash 8,720,000.00

Interest expense for 9 months 720,000.00


Less: interest expense last year - 160,000.00
Interest expense for the current year 560,000.00

Problem 2 Non-Interest bearing "Non-interest bearing", implicit/implied/similar

Face amount 6,000,000.00 it includes interest already


Discount 480,000.00 advance interest collected by the bank
PV of the notes 5,520,000.00

Oct 1 Cash 5,520,000.00


Discount on Notes payable 480,000.00
Notes Payable 6,000,000.00

Dec 31 Interest expense 180,000.00


Discount on notes payable 180,000.00

Balance Sheet
As of Dec 31
Current

Notes Payable 6,000,000.00


Less: Discount on N/P 300,000.00
C/A-Notes Payable 5,700,000.00

June 1, 2023
Interest expense 300,000.00
Discount on N/P 300,000.00

Notes Payable 6,000,000.00


Cash 6,000,000.00

What if Interest bearing?

Nov 1 Cash 6,000,000.00


Notes Payable 6,000,000.00

Dec 31 Interest expense 180,000.00


Interest payable 180,000.00

June 1 Notes Payable 6,000,000.00


Interest Payable 180,000.00
Interest expense 300,000.00
Cash 6,480,000.00

Problem 4

Feb 1 No Entry

April 1 Cash 12,000,000.00


Loans Payable 12,000,000.00

Jul 1 Interest expense 240,000.00


Cash 240,000.00

Loans Payable 12,000,000.00


Cash 12,000,000.00

Nov 1 Cash 19,100,000.00


Discount on N/P 900,000.00
Notes Payable 20,000,000.00

Dec 31 Interest expense 200,000.00


Discount on N/P 200,000.00

Aug 1 Interest expense 700,000.00


Discount on N/P 700,000.00

Notes Payable 20,000,000.00


Cash 20,000,000.00

Problem 5

Jan 1, 2022 Land 1,000,000.00


Notes Payable 900,000.00
Cash 100,000.00

Dec 31, 2022 Interest expense 90,000.00


Interest payable 90,000.00

Dec 31, 2023 Interest expense 99,000.00


Interest payable 99,000.00

Principal 900,000.00
Interest exp-2022 90,000.00
Total 990,000.00

Jan 1 ,2024 Notes Payable 900,000.00


Interest Payable 189,000.00
Cash 1,089,000.00

Problem 6

Installment Price 1,000,000.00


Cash Price 750,000.00
Discount on N/P 250,000.00

Cash Price 750,000.00 Cost of Machinery


Jan 1, 2022
Machinery 750,000.00
Discount on N/P 250,000.00
Notes Payable 800,000.00
Cash 200,000.00

Dec 31, 2022


Notes Payable Outstanding Method

Date Balance % Amount


Dec 31, 2022 800,000.00 40% 100,000.00
Dec 31, 2023 600,000.00 30% 75,000.00
Dec 31, 2024 400,000.00 20% 50,000.00
Dec 31, 2025 200,000.00 10% 25,000.00
2,000,000.00 100% 250,000.00

Notes Payable 200,000.00


Cash 200,000.00

Interest expense 100,000.00


Discount on N/P 100,000.00

Problem 8

PV of Notes 4,000,000.00 0.7118 2,847,200.00

Face amount 4,000,000.00


PV of note 2,847,200.00
Discount on N/P 1,152,800.00

Cost of Land
PV of Notes (4M) 2,847,200.00
Cash downpayment 1,250,000.00
Land 4,097,200.00

Jan 1, 2022 Land 4,097,200.00


Discount on N/P 1,152,800.00
Notes Payable 4,000,000.00
Cash 1,250,000.00
Table of Amortization

Date Interest exp Discount on N/P Present Value


Jan 1, 2022 - 1,152,800.00 2,847,200.00
Dec 31, 2022 341,664.00 811,136.00 3,188,864.00
Dec 31, 2023 382,663.68 428,472.32 3,571,527.68
Dec 31, 2024 428,472.32 - 0.00 4,000,000.00

Dec 31, 2022 Interest expense 341,664.00


Discount on N/P 341,664.00

Jan 1, 2025
Notes Payable 4,000,000.00
Cash 4,000,000.00
bearing", implicit/implied/similar interest

straight line method

You might also like