Examine Note 10 to MWW’s financial statements (page A-55). During the fiscal year ended January 27, 2001, MWW purchased some of its franchise stores and converted them to corporate stores.

a. How much long-term debt did MWW record as due to the vendors of the franchise stores?

b. How much of that debt should be classified as current on the January 27, 2001 balance sheet? Explain.

. What interest rate is being paid on this debt?

d. What are the repayment terms of this debt?

e. Why is it useful to know when the debt is to be repaid? What users and uses of accounting does this information serve?

f. It does not appear that this debt has been recorded at its present value. If the effective interest rate on the non-interest-bearing portion of the debt were 7%, what amount would have been reported on the January 27, 2001 balance sheet had it been recorded at its present value? What journal entry would have been made to record the debt? What journal entry would be required to record the payment on April 1, 2001?