Q No.

11-3(M & M)
• Current Liabilities
• Long-term mortgage-current portion 3200
• Accrued interest payable 2600
• withheld amount from paychecks 6100
• 11,900
• Long-term liabilities
• Mortgage note payable(800,000-3200) 796,800
• Note payable 75,000
• 871,800
 Q 11-4(M&M)(a)
• Interest stated separately in note:
• Current liabilities:
• Note Payable 250,000
• Add: Interest payable 5000
255,000
 Q 11-4(M&M)(b)
• Interest included in the face amount of note
• Current liabilities
• Note Payable 265,000
• Less: Discount on note payable 10,000
• 255,000
Original discount(250,000x1/2x12%) 15,000
Less: expired portion 5,000
Balance of discount 10,000
 MM(11-5)
• Trucks 272,000
• Discount on note 23,040
• Cash 80,000
• Note payable 215,040
 11-5 continue
• Dec.31
• Interest expense 11,520
• Discount on note payable 11,520

• 23040x9/18= 11520
 11-5 continue
• Dec.31
• Depreciation expense 25,500
• Accumulated depreciation 25,500

• 272,000/8= 34,000x9/12=25,500
 MM(11-6)
• 1,000,000X7.2/100= 72000X5 Years=
360,000

Annual interest charges 72,000

Accrued interest
72,000x15/360= 3000
 MM-Problem11-4
• June1.
• Cash 20,000
• Note payable 20,000
 MM-Problem11-4cont:
• July 19
• Office equipment 18,000
• Note payable 18,000
 MM-Problem11-4cont:
• July 31
• Note Payable 20,000
• Interest expense 400
• Cash 20400

• Interest expense
20,000x12%x60/360=400
 MM-Problem11-4cont:
• Sept.1
• Cash 240,000
• Discount on Note 4800
• Note payable 244,800

• Discount
240,000x8%=19,200x90/360=4800
 MM-Problem11-4cont:
• Oct 1.
• Inventory 16,200
• A/c Payable 16,200
 MM-Problem11-4cont:
• Oct 19
• Note payable 18,000
• Interest expense 450
• Cash 450
• Note Payable 18,000

• Interest 18000x10%x3/12=450
 MM-Problem11-4cont:
Adjusting entries
Interest expense 207
Interest payable 207

16200x10%x30/360= +
135 18,000x12%x12/360=72

135+72=207
 MM-Problem11-4cont:
• Adjusting entries
• Interest expense 3200
• Discount on note 3200

4800x60/90=3200
 MM 11-7
Amortization table
Date Amount Interest Reduction Unpaid
payable expense in balance balance
1.1 15215

30.6 4800 1522 3278 11937

1995
31.12 4800 1194 3606 8331
1995
30.6 4800 833 3967 4364
1996
31.12 4800 436 4364 0
 Class activity Amortization table
Date Amount Interest Reduction in Unpaid
payable expense balance balance
1.1 18954
2000
30.6 5000 1895.5 3104.6 15849.4
2001
31.12 5000 1584.94 3415.06 12434.3
2002
30.6 5000 1243.43 3756.57 8677.8
2003
31.12 5000 867.78 4132.22 4545.6
2004
2005 5000 454.56 4545.44 00
 Class activity Amortization table

Date Interest Reduction Unpaid

expense in balance balance
1.1 27036
1996

31.12 7000 3244.32 4255.68 22780.32

1996
31.12 7000 2733.64 4766.36 18013.96
1997
31.12 7000 2161.68 5338.32 12675.63
1998

31.12 7000 1521.08 5978.92 6696.71

1999
31.12 7000 803.61 6696.39 .31
2000
What is interest expense of 1996?
• Interest expense-1996

Income statement
• Interest expense $ 3244.32
How much current liability reported
in the balance sheet of 1996.
• BALANCE SHEET-1996
• Current liability
• Note payable due in one year $ 4766.36
 How much non-current liability
reported in 1996
• BALANCE SHEET
• Non-current liability

• Note payable 12675. 63