Question :
26.On January 1, 2015, Jackson Corporation issued a 4-year, 12%, : 1241716
26.On January 1, 2015, Jackson Corporation issued a 4-year, 12%, $20,000 installment note payable. The payment on this note is $6,585 and is paid annually at year-end beginning December 31, 2015. Complete the following amortization schedule.
Date
Cash
Interest Expense
Amortization
Carrying Value
Jan. 1, 2015
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2017
Dec. 31, 2018
27.On January 1, 2014, Standard Incorporated is going to issue long-term debt in order to obtain money required to finance the purchase of equipment. It will have to pay a market rate of interest of 10% on this borrowed money. Standard is considering two different financial instruments in order to obtain $10,494. The first instrument being considered is a 3-year, 12%, $10,000 note with interest payable every December 31 over the life of the note. Alternatively, a 3-year, non-interest-bearing note with maturity value of $13,657 will be issued. Show how Standard’s January 1, 2014 balance sheet and 2014 income statement will differ if Standard chooses to issue the non-interest-bearing note instead of the 10% note.
28.On January 1, 2015, Gee Company issued a 2-year, 8%, $20,000 installment note payable. The payment on this note is $11,215 and is paid annually at year-end beginning December 31, 2015. When the note was issued, the market rate of interest was 8%. Complete the following amortization schedule.
Date
Cash
Interest Expense
Principal
Carrying Value
1/1/15
12/31/15
12/31/16
29.On January 1, 2014, Grant Company leased telephone equipment from Xu, Inc. Grant uses straight-line depreciation. The contract requires Grant to pay $5,000 each December 31 for the next three years, at which time the equipment is to be returned to Xu. Using an interest rate of 8%, the present value of the lease payments is $12,885. The following is Grant’s January 1, 2014, balance sheet before the lease agreement.
Current assets
$20,000
Equipment
$25,000
Accumulated depreciation
(3,000)
22,000
Total assets
$42,000
Liabilities
$20,000
Shareholders’ equity
22,000
Total liabilities and shareholders’ equity
$42,000
Calculate and compare Grant’s debt/equity ratios on January 1, 2014, immediately after the lease is signed, as an operating lease and a capital lease.
30.What is the nature of the table presented? What is being amortized?