Problem 1

Kross Products began operations in 2024. The following selected transactions occurred during September 2024 through Dec 31, 2024. Kross's fiscal year ends on December 31, 2024:

a. On November 1, Kross opened a checking account and negotiated a short-term line of credit of up to $10,000,000 at 10% interest. Interest on outstanding balances is calculated on the last day of each month.

b. Kross received $3,000 of refundable deposits on November 30th for reusable containers. Customers must return the containers within two months to receive their refund.

c. On December 1st, Kross borrowed $600,000 on its line of credit.

d. Kross received 75% of the reusable containers back during the month of December.

e. For the September through December period, cash sales totaled $5,000,000. The state sales tax rate is 4%. Cost of these sales is $2,900,000.

f. On December 31st, Grossman paid $100,000 on its line of credit and accrued the appropriate amount of interest (payable on January 1, 2025).

Requirement

1. Prepare the appropriate journal entries for the 2024 transactions.

2. Prepare the liability section of the balance sheet at December 31, 2024, based on the data supplied.

1	Bond Price		2	Amortization Table
				Period	Cash	Interest	Amort	Balance
	Calculations Here:

Problem 2

On Dec 31, 2022, Huey, Inc. issued a $67,800,000 Note to Huge Deal Co. in payment for 5 bull dozers. The note term is 3 years and contains a 5% annual interest payment at each year end with the note face to be paid at term end. If Huey had been able been able to pay cash for the bull dozers, the price would have been $56,970,000.

Requirements:

1. What is the value of the bull dozers?

2. What is the effective interest rate of this Note?

3. Create an amortization table.

4. Create the journal entries for note issuance, the last interest payment, and note re-payment.

1	Asset Price		3	Amortization Table
2	Effective Rate			Period	Cash	Interest	Amort	Balance
	Calculations Here: