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bank lends you $150,000. You are to
repay the loan in equal semi-annual payments over 12 years at 10% compounded
semi-annually. What are the semi-annual
an amortization schedule showing the breakdown of the payments between
principal and interest for the loan.
the journal entry to record the first semiannual payment on the loan.
d. How much
will you owe the bank after the second interest payment?
e. If you
did not have access to a computer or financial calculator, how could you easily
determine the amount of interest you would pay over the life of this loan?
that your answer in e is correct with an
1, 2014, Bradey Company sold a patent to Penn Company in exchange for a
$100,000 zero interest bearing note due on April 1, 2016. There was no established exchange price for
the patent and the note had no ready market value. The prevailing interest rate for a note of
this type on April 1, 2014 was 12%. The patent had a carrying value of $40,000
on January 1, 2014 and the amortization for the year ended December 31, 2014
would have been $8000. The collection of
the note receivable from Penn Company was reasonably assured.
Prepare all journal entries and adjusting entries that Bradey company would make for 2014, 2015 and 2016 related to the sale of the
patent. Bradey’s fiscal year ends on December 31st.