1. Note

Receivable:

On Jan 1

st

, 2014, Xena Inc.

provi

ded services in exchange for a 2

-year $100,000, 8% note

receivable that pays interest quarterly on March 31

st

, June 30

th

, September 30

th

and Dec 31

st

.

The customers normal borrowing rate

(market rate)

is 12%.

On, Jan 1

st

, 2014, the carrying

value of the note receivable is $___________ Round to the

nearest dollar.

a.

Prepare a well

-labeled

schedule

(with debits/credits shown) for the journal entries

through the life of the Note.

b.

Prepare the original Journal Entry to record the issue of the

No

te Receivable

c.

Prepare the Journal Entry to record the Interest on 12/31/15 for the

Note Receivable

2. Bond

Payable

:

On 7/1/14, Sasha issued

$ 2,000,000 12% bonds, maturing in 5 years with a yield of 10%,

compounded semi

-annually. The bonds pay interest semi

-annually on June 30 and December 31

of each year. The bonds are to be accounted for under the effective interest method. Round to

the n

earest dollar.

At what amount were the bonds issued? __________

a.

Prepare a well

-labeled

schedule

(with debits/credits shown) for the journal entries

through the life of the Bond.

b.

Prepare the original Journal Entry to record the issue of the

Bond

c.

Prepare the Journal Entry to record the 12/31/15 Interest related to the

Bond