Question
1:Rusty Corporation purchased a rust-inhibiting machine by paying $51,000 cash on the purchase date and agreed to pay $10,200 every three months during the next
1:Rusty Corporation purchased a rust-inhibiting machine by paying $51,000 cash on the purchase date and agreed to pay $10,200 every three months during the next two years. The first payment is due three months after the purchase date. Rusty's incremental borrowing rate is 8%. The liability reported on the balance sheet as of the purchase date, after the initial $51,000 payment was made, is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided.)
$125,720.
$74,720.
$132,600.
$81,600.
2:
Miranda Company borrowed $123,000 cash on September 1, 2016, and signed a one-year 4%, interest-bearing note payable. Assume no adjusting entries have been made during the year. Which of the following would be the required adjusting entry at the end of the December 31, 2016 accounting period?
Interest expense | 1,640 |
|
Interest payable |
| 1,640 |
Interest expense | 4,920 |
|
Interest payable |
| 4,920 |
Interest payable | 1,640 |
|
Interest expense |
| 1,640 |
Notes payable | 123,000 |
|
Interest expense | 4,920 |
|
Cash |
| 127,920 |
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