Ask Question
BusinessBusiness
7 July, 17:16

On January 1, 2021, Nantucket Ferry borrowed $14,000,000 cash from BankOne and issued a four-year, $14,000,000, 6% note. Interest was payable annually on December 31. Prepare the journal entries for both firms to record interest at December 31, 2021.

+2
Answers (1)
  1. 7 July, 17:32
    0
    If Interest is not Paid yet

    Nantucket Ferry

    Dr. Interest Expense $840,000

    Cr. Interest payable $840,000

    BankOne

    Dr. Interest receivable $840,000

    Cr. Interest Income $840,000

    If Interest is Paid

    Nantucket Ferry

    Dr. Interest Expense $840,000

    Cr. Cash $840,000

    BankOne

    Dr. Cash $840,000

    Cr. Interest Income $840,000

    Explanation:

    Amount of interest is the expense for Nantucket Ferry and Income for the BankOne on the bond.

    As per given data

    Amount borrowed = $14,000,000

    Coupon rate = 6%

    Interest in paid on and received on the bnd is calculated by using the face value and coupon rate of the bond.

    Coupon Payment = $14,000,000 x 6% = $840,000

    $840,000 will be paid annually to the Bank one.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “On January 1, 2021, Nantucket Ferry borrowed $14,000,000 cash from BankOne and issued a four-year, $14,000,000, 6% note. Interest was ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Wesimann Co. issued 10-year bonds a year ago at a coupon rate of 8.2 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.
Answers (1)
A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If, based on that assumption, he increases the price of gas at his station:
Answers (1)
In the single-period inventory model, the overage cost is A. salvage value per unit. B. sales price per unit minus cost per unit. C. cost per unit minus salvage value per unit. D. cost per unit minus sales price per unit.
Answers (1)
The rate of return on the common stock of Lancaster Woolens is expected to be 21 percent in a boom economy, 11 percent in a normal economy, and only 3 percent in a recessionary economy.
Answers (1)
During an economic upturn when consumer income rises, the demand for caviar increases and the demand for hummus decreases. This implies that caviar: A) and hummus are complements. B) is a normal good and hummus is an inferior good.
Answers (1)
New Questions in Business
Select all the correct answers Amber is writing to an accountant that she would like to interview to gain information about the career field. What information should she include in her letter? A.
Answers (2)
What is the acid-test ratio for a merchant with the following account balances? (Round your answer to two decimal places.
Answers (2)
When the market fails to adjust for the full costs of a firm's behavior, this is called?
Answers (1)
What is the basic formula of the malthus theorem?
Answers (1)
If an industry is perfectly competitive or monopolistically competitive, then the government has relatively little reason for concern about the extent of competition new ways of pleasing customers taking advantage of economies of scale regulatory
Answers (1)
Home » Business » On January 1, 2021, Nantucket Ferry borrowed $14,000,000 cash from BankOne and issued a four-year, $14,000,000, 6% note. Interest was payable annually on December 31. Prepare the journal entries for both firms to record interest at December 31, 2021.
Sign Up Forgot Password?