Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7, Problem 7.1BE
Simple Interest. Assume Shafer Corporation borrowed $100,000 for two years with a stated interest rate of 5%. Interest is not compounded. What is the total interest expense?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
a) A bank made a 4-year 12% amortizing $2,500,000 loan with equal payments. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year?
b) Assume instead the bank demands that the borrower pay interest only for the first two years and then principal payments of $1,250,000 in years 3 and 4. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? Assume the same 12% rate of interest.
For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
Crafty Inc. borrowed $10,000 with a five-year 11.26% annual interest rate on 10/1/20X1. On their
year-end financial statements dated 12/31/20X1, what amount should be reflected for interest
expense?
Input your response rounded to a whole number, without commas and without dollar signs.
Your Answer:
Answer
The principal P is borrowed at a simple interest rate r for a period of time t. Find the simple interest owed for the use of the money. Assume there are 360 days in a year.
P = $2000, r = 5.5%, t = 18 months
Chapter 7 Solutions
Intermediate Accounting
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - If interest is compounded more than once a year,...Ch. 7 - Prob. 7.4QCh. 7 - Can an ordinary annuity table be used to determine...Ch. 7 - Prob. 7.6QCh. 7 - Is the present value of an ordinary annuity more...Ch. 7 - Prob. 7.8QCh. 7 - Simple Interest. Assume Shafer Corporation...Ch. 7 - Compound Interest. Assume Shafer Corporation...
Ch. 7 - Prob. 7.3BECh. 7 - Prob. 7.4BECh. 7 - Prob. 7.5BECh. 7 - Present Value of a Single Sum, Compound Interest....Ch. 7 - Future Value of a Single Sum, Compound Interest....Ch. 7 - Prob. 7.8BECh. 7 - Present Value of a Single Sum, Compounded Interest...Ch. 7 - Prob. 7.10BECh. 7 - Present Value of a Single Sum, Calculating Time...Ch. 7 - Future Value of an Ordinary Annuity. An...Ch. 7 - Future Value of an Annuity Due. Mariah Carey...Ch. 7 - Future Value of an Ordinary Annuity: Calculating...Ch. 7 - Present Value of an Ordinary Annuity. CB...Ch. 7 - Present Value of an Annuity Due, Semiannual...Ch. 7 - Prob. 7.17BECh. 7 - Ordinary Annuity, Annuity Due, Using Interest...Ch. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Future Value of an Ordinary Annuity, Future Value...Ch. 7 - Single Sum, Solving for Other Variables. Two...Ch. 7 - Ordinary Annuity, Solve for Interest Rate,...Ch. 7 - Present Value, Note Payable Prices. Wiz Khalifa...Ch. 7 - Future Value of a Deterred Annuity. Lenny Shafer...Ch. 7 - Prob. 7.13ECh. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Future Value of an Annuity Due, Decision Making....Ch. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.1PCh. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Present Value, Present Value of an Annuity Due,...Ch. 7 - Prob. 7.4PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.6PCh. 7 - Prob. 7.7PCh. 7 - Present Value of an Annuity Due, Deferred...Ch. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Future Value of an Ordinary Annuity, Deferred...Ch. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Prob. 7.12PCh. 7 - Prob. 7.13PCh. 7 - Expected Cash Flows. Hiteck Electronics sells a...Ch. 7 - Prob. 7.15P
Additional Business Textbook Solutions
Find more solutions based on key concepts
Place the letter of the appropriate accounting cost in Column 2 in the blank next to each decision category in ...
Fundamentals Of Cost Accounting (6th Edition)
BE1-7 Indicate which statement you would examine to find each of the following items: income statement (IS), ba...
Financial Accounting: Tools for Business Decision Making, 8th Edition
List five asset accounts, three liability accounts, and five expense accounts included in the acquisition and p...
Auditing and Assurance Services (16th Edition)
Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements Koontz Comp...
Introduction To Managerial Accounting
How would the decision to dispose of a segment of operations using a split-off rather than a spin-off impact th...
Advanced Financial Accounting
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A man borrowed P18,400.00 from a credit union that charges 8% simple interest for 1 year and 9 months. What is the amount of interest charged?arrow_forward1.Mr. Romuaro Godinez comes to the financial advisor Alquimidez Serrano, and asks him to calculate the interest to be earned on a deposit for the amount of 850,000.00; when the current interest rate is 8.75%, capitalizable quarterly, and it was invested for 15 years, 4 months and 17 days. The Finance Company reinvests at simple interest when there are not complete capitalization periods.arrow_forwardA bank that provides overdraft protection charges 12 percent for each $100 (or portion of $100) borrowed when an overdraft occurs. a. What amount of interest would the customer pay for a $188 overdraft? (Assume the interest is for the full amount borrowed for whole year.) b. How much would be saved by using the overdraft protection loan if a customer has three overdraft charges of $30 each during the year?arrow_forward
- 3. A loan of $20,000 has a stated interest rate of 5 percent per year. Repayment of principal and all accumulated interest is to be made at the end of year 10. a) How much is paid at the end of the tenth year? b) How much simple interest is paid (excluding the interest accumulated on interest)? c) How much compound interest is paid (i.e., interest on interest)? please show formulas. Thanksarrow_forwardStinson Corporation borrowed $85,000 at 8% compounded quarterly to buy a warehouse. Monthly payments of $1200 were made over the term of the loan. Construct a partial amortization schedule showing the last 2 payments. Determine the total amount paid to settle the loan. Show work, not just the answer. Determine the total principal repaid. Determine the total amount of interest paid. Show work, not just the answer.arrow_forwardABC Date Enterprise takes out a $40,000 loen to finance the purchase of new physical capital. It must repay the loan in full with interest in one year. The interest rate is 8 percent and the applicable corporate tax rate is 40 percent. What is the present value savings from the deductibility of the interest payment from ABC Date Enterprise's toxes? NOTE: Please round your numeric answer to the nearest dolliar. Do not enter the dollar sign or any commas.arrow_forward
- SureWin Company owes an amount of debt to a bank and the bank proposed the following annual payments to pay off the debt. Year 0 (Today): 20,000 Year 1: 24,000; Year 2: 30,000; Year 3: 30,000; Year 4: 35,000; (1) If the appropriate interest rate that bank is charging is APR 6% annual compounding, what would be the amount to debt owed today? (2) If SureWin can negotiate with the bank to pay yearly equal instalments over 4 years starting from the end of year 1 with the same 6% annual interest rate, what would be the amount of yearly payment? (3) If the bank accepts SureWin proposal in (2), what would be the interest amount paid to the bank in the first year?arrow_forward2.48. Alhambra Corporation borrowed $1 million from Anaheim Bank with the understanding that Alhambra will pay the loan back in 6 monthly installments of $175,000 each. Find the annual rate of interest charged by the bank.arrow_forwardCertain Concrete Company deposits $2,000 at the end of each quarter into an account paying 11% interest compounded quarterly. What is the value of the account at the end of 7 1/2 1 2 years? (a) State the type. A. present valueB. ordinary annuity C. sinking fund D. amortization E. none of these (b) Answer the question. (Round your answer to the nearest cent.)arrow_forward
- g. Suppose you borrowed Kshs. 30,000 from your bank to finance a start- up business. The bank charges you an interest rate of 8 % and requires you to make 3 equal end of year installments. Required: marks) Compute the installment amount. Compute the interest amount paid in the first year. Compute the ending balance at the end of the first year i. ii. 111. ii.arrow_forwardThe following loan was paid in full before its due date. a) Find the value of h using an appropriate formula. b) Use the actuarial method to find the amount of unearned interest. c) Find the payoff amount. Regular Monthly Payment APR # of Payments Remaining after Payoff 8.7% 4 $214 What is the finance charge per $100 financed? h = $ (Round to the nearest cent.) The unearned interest is about $ (Round to the nearest cent.) The payoff amount is $ Enter your answer in each of the answer boxes. f12 inser f9 f1o f7 fg f6 f4 f5 esc 5 7 8. %24 3 %23arrow_forwardMr. Poseidon Neptune, owner of Underwater Bar Inc., borrowed P350,000 at 11% from a bank to expand its operations. Given that the loan is for 3 years, compute for the total interest assuming (a) simple interest; and (b) compound interest.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY