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A Partial Amortization Schedule For A 10 Year Note Payable Issued

This document provides information about a partial amortization schedule for a 10-year note payable issued on January 1, 2016. It also includes journal entries for Singer Company pertaining to its line of credit for the first three months of 2016, showing amounts borrowed and repaid as well as interest calculations. Finally, it presents a chart for Composite Solutions Company to determine the effects of issuing bonds payable or additional common stock on its current and debt-to-asset ratios, and the increase in retained earnings under each financing option.

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27 views1 page

A Partial Amortization Schedule For A 10 Year Note Payable Issued

This document provides information about a partial amortization schedule for a 10-year note payable issued on January 1, 2016. It also includes journal entries for Singer Company pertaining to its line of credit for the first three months of 2016, showing amounts borrowed and repaid as well as interest calculations. Finally, it presents a chart for Composite Solutions Company to determine the effects of issuing bonds payable or additional common stock on its current and debt-to-asset ratios, and the increase in retained earnings under each financing option.

Uploaded by

trilocksp Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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A partial amortization schedule for a 10 year note payable

issued
A partial amortization schedule for a 10 year note payable issued

A partial amortization schedule for a 10-year note payable issued on January 1, 2016, is
shown below.

a. Using the financial statement model below, record the appropriate amounts for the following
two events:
1. January 1, 2016, issue of note payable
2. December 31, 2016, payment on the note payable.
Exercise 10-5A on page 567
Singer Company has a line of credit with United Bank. Singer can borrow up to $400,000 at any
time to over the course of 2016 calendar year. The following table shows the prime rate
expressed as an annual percentage along with the amounts borrowed and repaid during the
first three months of 2016. Singer agreed to pay interest at an annual rate equal to 2% above
the bank's prime rate. Funds are borrowed or repaid on the first day of each month. Interest is
payable in cash on the last day of the month. The interest rate applied to the outstanding
monthly balance. For example, Singer pays 6.5% (4.5% + 2%) annual interest on $140,000 for
the month of February.
Month...............Amount Borrowed/(Repaid)....................Prime Rate for the Month
January...........................$80,000.............................................4.0%
February...........................60,000................................................4.5
March.............................(20,000)...............................................4.0
Provide all journal entries pertaining to Singer's line of credit for the first three months of 2016.
Exercise 10-25A on page 572
Composite Solutions Company (CSC) has the following account balances:

The company wishes to raise $80,000 in cash and is considering two financing options: CSC
can sell $80,000 of bonds payable, or it can issue additional common stock for $80,000. To help
the decision process, CSC's management wants to determine the effects of each alternative on
its current ratio and debt to assets ratio.
Help CSC's management company by completing the following chart
Ratio Currently If bonds are issued If stock is issued
Current ratio:
Debt to asset ratio:
Assume that after the funds are invested, EBIT amounts to $60,000. Also assume the company
pays $6,000 in dividends or $6,000 in interest depending on which source of financing is used.
Based on a 40% tax rate, determine the amount of the increase in retained earnings that would
result under each financing option.
Exercise 10-19A on page 571
On January 1, 2016, the Diamond Association issued bonds with a face value of $300,000, a

Unlock answers here solutiondone.online

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