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12.
On November 1, Year 1, Noble Co. borrowed $72,000 from South Bank and signed a 11%, six-month note payable, all due at maturity. The interest on this loan is stated separately. How much interest expense will Noble recognize on this note in Year 2?
a. $2,640.
b.$3,960.
c.$8,920.
d.$7,920.
19.Before any month-end adjustments are made, the net income of Bennett Company is $76,600. However, the following adjustments are necessary: office supplies used, $3,110; services performed for clients but not yet recorded or collected, $3,760; interest accrued on note payable to bank, $2,410. After adjusting entries are made for the items listed above, Russell Company's net income would be:
a..$76,600.
b.$67,320.
c.$78,360.
d. $74,840.
26.
On December 1, Year 1, Bradley Corporation incurs a 15-year $360,000 mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $4,555, which include interest computed at the rate of 13% per year. The first monthly payment is made on December 31, Year 1. The total liability related to this mortgage reported in Bradley's balance sheet at December 31, Year 1, is:
a $359,545.
b$359,345.
c $360,655.
d $355,445.
Answers:
12. On November 1, Year 1, Noble Co. borrowed $72,000 from South Bank and signed a 11%, six-month note payable, all due at maturity. The interest on this loan is stated separately. How much interest expense will Noble recognize on this note in Year 2?
Four months of interest will be recognized.
72,000 x 11% x 4/12 =
a. $2,640.
19.Before any month-end adjustments are made, the net income of Bennett Company is $76,600. However, the following adjustments are necessary: office supplies used, $3,110; services performed for clients but not yet recorded or collected, $3,760; interest accrued on note payable to bank, $2,410. After adjusting entries are made for the items listed above, Russell Company's net income would be:
76,600 – 3,110 + 3,760 – 2,410 =
d. $74,840.
26. On December 1, Year 1, Bradley Corporation incurs a 15-year $360,000 mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $4,555, which include interest computed at the rate of 13% per year. The first monthly payment is made on December 31, Year 1. The total liability related to this mortgage reported in Bradley's balance sheet at December 31, Year 1, is:
360,000 x 13% x 1/12 = $3,900 Interest Expense
4,555 – 3,900 = $655 Going Towards Principle
360,000 – 655 =
b$359,345.