Author Question: Needem, Inc. borrowed 100,000 from Lendem Commercial Bank, on April 1, 2009 and agreed to repay the ... (Read 59 times)

jman1234 · **on:** Jul 5, 2018

Needem, Inc. borrowed 100,000 from Lendem Commercial Bank, on April 1, 2009 and agreed to repay the principal plus interest on April 1, 2012. The note bears interest at 9 annually (do not compound). Fill in the blanks in the chart below.

Interest Expense Cash Paid For Interest Interest Payable
Year ended Dec. 31, 2009
Year ended Dec. 31, 2010
Year ended Dec. 31, 2011
Year ended Dec. 31, 2012

Question 2

Which account will be included in both service and merchandising companies, closing entries?
a. Sales
b. Cost of Merchandise Sold
c. Purchase Discounts
d. Sales Returns and Allowances

medine · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Interest Expense Cash Paid For Interest Interest Payable
Year ended Dec. 31, 2009 6,750 0 6,750
Year ended Dec. 31, 2010 9,000 0 15,750
Year ended Dec. 31, 2011 9,000 0 24,750
Year ended Dec. 31, 2012 2,250 (27,000) 0

2009 = 100,000 x .09 x (9/12);
2010 and 2011 = 100,000 x .09 x (12/12);
2012 = 100,000 x .09 x (3/12)

Answer to Question 2

a