Accounting 303

BE 6-2. Tony Bautista needs 25000 in 4 years. what amount must he invest today if his investment earns 12% compounded annually? What amount must he invest if his investment earns 12% annnual interest compounded quarterly?

A) For annually he would invest 15,888, and for quarterly he would invest 15,579.

BE 6-3. Candace Willis will invest 30,000 today. She needs 150000 in 21 years. What annual interest rate must she earn?

A) 8% would be the annual interest rate.

BE 7-8. On October 1, 2010, Chung, Inc. assigns $1,000,000 of its accounts receivable to Seneca National Bank as collateral for a $750,000 note. The bank assesses a finance charge of 2% of the receivables assigned and interest on the note of 9%. Prepare the October 1 journal entries for both Chung and Seneca.

C Cash 730000

Interest Expense 20000 (2% x 1000000 = 20000)

Notes Payable 750000

S Notes Receivable 750000

Cash 730000

Interest Revenue 20000

BE 7-15. Horton Corporation is preparing a bank reconciliation and has identified the following potential reconciling items. For each item, indicate if it is (1) added to balance per bank statement, (2) deducted from balance per bank statement, (3) added to balance per books, or (4) deducted from balance per books.

(a) Deposit in transit $5,500.

(b) Bank service charges $25.

(c) Interest credited to Horton’s account $31.

(d) Outstanding checks $7,422.

(e) NSF check returned $377.

(a) Added to balance per bank statement (1)

(b) Deducted from balance per books (4)

(c) Added to balance per books (3)

(d) Deducted from balance per bank statement (2)

(e) Deducted from balance per books (4)

Horton Corporation is preparing a bank reconciliation and has identified the following poten-tial reconciling items. For each item, indicate if it is (1) added to balance per bank statement, (2) deductedfrom balance per bank statement, (3) added to balance per books, or...