prepare adjusting entry

florenda quino forwarders borrowed 600,000 from the bank on September 1 2013. The note carried an % annual rate of interest and was set to mature on feb 28, 2014 interest and principal we're paid in cash on the maturity date

required

1. what was the amount of interest expense paid in cash in 2013?
2. what was the amount of interest expense recognized on the 2013 income statement ?
3.what was the amount of the total liabilities shown on the 2013 balance sheet ?
4. what was the total amount of cash that was paid to the bank on feb 28, 2014 for principal and interest?
5. what was the amount of interest expense shown on the 2014 income statement?

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jepessoa jepessoa · Answer 1 · 2020-11-28T01:10:50+01:00

Answer:

the interest rate is missing, so I looked for similar questions and found that it is 8%:

1. what was the amount of interest expense paid in cash in 2013?

interest expense = $600,000 x 8% x 4/12 = $16,000

2. what was the amount of interest expense recognized on the 2013 income statement ?

$16,000

3.what was the amount of the total liabilities shown on the 2013 balance sheet ?

notes payable $600,000

interest payable $16,000

total $616,000

4. what was the total amount of cash that was paid to the bank on feb 28, 2014 for principal and interest?

total interest expense = $600,000 x 8% x 6/12 = $24,000

total cash paid = $624,000

5. what was the amount of interest expense shown on the 2014 income statement?

interest expense 2014 = $24,000 - $16,000 = $8,000

anthougo anthougo · Answer 2 · 2021-11-26T10:59:29+01:00

1. The amount of interest that Florenda Quino Forwarders paid in 2013 was $0.

2. The amount of interest that Florenda Quino recognized on the 2013 income statement was $16,000.

3. The amount of the total liabilities that Florenda Quino showed on its 2013 balance sheet for this bank loan was $616,000.

4. The total amount of cash that Florenda Quino paid to the bank on February 28, 2014, was $624,000.

5. The amount of interest expense shown on Florenda Quino's 2014 income statement was $8,000.

Data and Calculations:

Bank loan on Sept. 1, 2013 = $600,000

Annual interest rate = 8%

Maturity date = February 28, 2014

Maturity period = 6 months

Interest recognized in 2013 = $16,000 ($600,000 x 8% x 4/12)

Interest for one month = $4,000 ($600,000 x 8% x 1/12)

Interest for six months = $24,000 ($600,000 x 8% x 6/12)

Interest recognized in 2014 = $8,000 ($600,000 x 8% x 2/12)

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