Question

On April 1, 2018, Hope Co. accepted a $5,000 face value note as evidence of a...

On April 1, 2018, Hope Co. accepted a $5,000 face value note as evidence of a loan it made to Cannon Company. The note had a 12 percent interest rate and a one-year term.

  1. The cash flow from operating activities shown, on Hope’s 2019 statement of cash flows, would be
  2. Hope Company’s December 31, 2018 balance sheet would show total receivables in the amount of
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Date of acceptance of note receivable = April 1, 2018

Face value of note = $5,000

Interest rate = 12%

Maturity period of note = 1 year

Interest received at the maturity of note = Face value of note x Interest rate

= 5,000 x 12%

= $600

The cash flow from operating activities shown, on Hope’s 2019 statement of cash flows, would be = $600

Interest receivable at December 31, 2018 = Face value of note x Interest rate x 9/12

= 5,000 x 12% x 9/12

= $450

Hope Company’s December 31, 2018 balance sheet would show total receivables in the amount of = Note receivable + Interest receivable

= 5,000 + 450

= $5,450

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1) On December 31, 2018, Ava Company had an ending balance of $7,356 in its accounts...
1) On December 31, 2018, Ava Company had an ending balance of $7,356 in its accounts receivable account and an unadjusted (current) balance in its allowance for doubtful accounts account of $143. Ava estimates uncollectible accounts expense to be 9% of receivables. .Based on this information, the amount of net realizable accounts receivable shown on the 2018 balance sheet is $___________ 2) Hope Company’s total assets were $5,107. Hope collected on $529 of account receivable that had previously been written...
Grove Co started trading on 1 January 2018 with a medium-term 5% loan of €30,000 and...
Grove Co started trading on 1 January 2018 with a medium-term 5% loan of €30,000 and a share issue which raised €40,000. The company purchased non-current assets for €35,000, for which €25,000 was paid in cash and a note payable due in June 2019 was signed for €10,000. During the year to 31 December 2018 entered into the following transactions: Purchases from suppliers were €19,500, of which €2,500 was unpaid at the year-end. Wages and salaries amounted to €10,500, of...
Rainey Enterprises loaned $50,000 to Small Co. on June 1, 2018, for one year at 9...
Rainey Enterprises loaned $50,000 to Small Co. on June 1, 2018, for one year at 9 percent interest. Required Show the effects of the following transactions in a horizontal statements. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). For any element not affected by the event, leave the cell blank. (Not every cell will require entry. Do not round intermediate calculations. Enter any decreases to...
A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1,...
A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1, 2018, is shown as follows. Accounting Period Principal Balance January 1 Cash Payment Applied to Interest Applied to Principal 2018 $ 133,000 $ 34,193 $ 11,970 $ 22,223 2019 110,777 34,193 9,970 24,223 2020 86,554 34,193 7,790 26,403 Using a financial statements model like the one shown, record the appropriate amounts for the following two events: (Enter any decreases to account balances and cash...
Diaz Company issued $180,000 face value bonds on January 1, 2018. The bonds had a 7%...
Diaz Company issued $180,000 face value bonds on January 1, 2018. The bonds had a 7% stated rate of interest and a five-year term. Interest paid in cash annually, beginning December 31, 2018. The bonds were at 98. The straight-line method is used for amortization. a). Use a financial statements model like the one shown below to demonstrate how (1) January 1, 2018, bond issue and (2) December 31, 2018, recognition of interest expense, including the amortization of the discount,...
Organic Farmers Co-Op borrows $336,000 cash on October 1, 2018, by signing a 180-day, 15% note...
Organic Farmers Co-Op borrows $336,000 cash on October 1, 2018, by signing a 180-day, 15% note with a face value of $336,000. Required: 1. How much interest expense results from this note in 2018? 2. How much interest expense results from this note in 2019? 3. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2018, and (c) payment of the note at maturity. (Assume no reversing entries are made.)
Rainey Enterprises loaned $20,000 to Small Co. on June 1, 2018, for one year at 6...
Rainey Enterprises loaned $20,000 to Small Co. on June 1, 2018, for one year at 6 percent interest. Required Show the effects of the following transactions in a horizontal statements. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). The letters NA indicate that an element is not affected by the event. (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows...
On December 1, Christy Co. accepted a 60-day, 6%, $1,000 note due January 30. On December...
On December 1, Christy Co. accepted a 60-day, 6%, $1,000 note due January 30. On December 31, the appropriate year-end adjusting entry was made. On January 30, the note was honored and paid in full. The entry to record receipt of payment on January 30 (assuming no reversing entry was made) would include a credit to: (Check all that apply.) Multiple select question. ☐ Interest Receivable for $5. ☐ Cash for $1,010. ☐ Notes Receivable for $1,000. ☐ Interest Revenue...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face...
On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,121 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $22,260 cash per year. Organize the information in accounts under an accounting...
On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished...
On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows: January 1, 2018 $ 300,000 September 1, 2018 $ 450,000 December 31, 2018 $ 450,000 March 31, 2019 $ 450,000 Dreamworld had the following debt obligations outstanding during both years: Construction loan, 10%             $500,000              Long-term note, 12%                      $2,500,000 Required: What would Dreamworld's capitalized interest be in 2019 (assuming interest...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT