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Recording Entries for Interest$-$Bearing and Noninterest$-$Bearing Notes

Anne Taylor Company borrowed cash on August $1$ of Year $1,$ by signing a $$73,260($face amount$),$ one$-$year note payable, due on July $31$ of Year $2.$ The accounting period of Anne Taylor ends December $31.$ Assume an effective interest rate of $11\%.$

Interest$-$Bearing Note

Noninterest$-$Bearing Note

a$.$ How much cash should Anne Taylor Company receive from the note on August $1$ of Year $1,$ assuming the note is an interest$-$bearing note?

b$.$ Provide the following entries and reporting amounts:

August $1$ of Year $1,$ date of the loan.

December $31$ of Year $1,$ adjusting entry.

July $31$ of Year $2,$ payment of the note.

Note: Round your answers to the nearest whole dollar.

$\backslash$table$[[$Date$,$Account Name,Dr$.,$Cr$.],[1.$ Aug. $1,$ Year $1,,0,0],[,0,0],[$To record issue of note.,,$],[2.$ Dec. $31,$ Year $1,,0,0],[,0,0],[$To record year$-$end adjusting entry,,,$],[3.$ July $31,$ Year $2,,0,0],[,0,0],[,0,0],[,0,0],[$To record payment of note.,,$]]$

c$.$ What liability amounts should be shown on the December $31$ of Year $1$ balance sheet?

Question $1$

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Marked out of $1\mathrm{.}25$

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Recording Entries for Interest$-$Bearing and Noninterest$-$Bearing Notes

Anne Taylor Company borrowed cash on August $1$ of Year $1,$ by signing a $$73,260($face amount$),$ one$-$year note payable, due on July $31$ of Year $2.$ The accounting period of Anne Taylor ends December $31.$ Assume an effective interest rate of $11\%.$

Interest$-$Bearing Note

Noninterest$-$Bearing Note

d$.$ Answer $($a$)$ and $($c$)$ assuming that the note is noninterest$-$bearing. Use the straight$-$line method to amortize any discount on note payable.

a$.$ How much cash should Anne Taylor Company receive from the note on August $1$ of Year $1,$ assuming the note is a noninterest$-$bearing note?

c$.$ What liability amounts should be shown on the December $31$ of Year $1$ balance sheet?

$\backslash$table$[[,$Balance Sheet, Dec. $31,,$Year $1],[,$Current liabilities,,$],[,,$$$,0]]$