Reference no: EM131208034

Non-Interest-Bearing Notes Payable On October 1, 2014, Timur Enterprises borrowed $18,200 from Redhills Savings and Loan by issuing a 12-month note. The bank discounted the note at 9%. Required: 1. Identify and analyze the effect of the issuance of the note. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues – Expenses = Net Income -18200 -18200 0 0 0 0 0 0 0 0 0 2. Identify and analyze the effect of the accrual of interest on December 31, 2014. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Use months in calculation. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues – Expenses = Net Income 0 546 -546 0 -546 -546 3. Identify and analyze the effect of the payment of the note on October 1, 2015. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues – Expenses = Net Income -20384 -18746 -1638 0 -1638 -1638 0 0 0 0 0 0 Hint(s) 4. What effective rate of interest did Timur pay? Round effective interest rate calculations to four decimal places, but enter as a percentage with two decimals; for example, .17629 rounds to .1763 and would be entered as 17.63, indicating 17.63%. %