Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $39.2 million cash on October 1,2015, to provide working capital for anticipated expansion. Precision signs a one-year, 8% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.1.Prepare the journal entries on October 1, 2015, to record the issuance of the note.
2.Record the adjustment on December 31, 2015.
3.Prepare the journal entry on September 30, 2016, to record payment of the notes payable at maturity
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Ответ:
1) October 1 2015, Cash $39.2million Dr
Notes Payable $39.2million Cr
2) December 31, 2015 Interest expense $0.784million Dr
Interest Payable $0.784million Cr
3) September 30, 2016 Notes Payable $39.2million Dr
Interest Payable $0.784million Dr
Interest Expense $2.352million Dr
Cash $42.336million Cr
Explanation:
1.
When note is issued, liability is credit by the notes value and cash is credited.
2.
The adjusting entry is prepared 3 months after the note is issued so the 3 month's interest on note relates to 2015 and it should be recorded as expense and as it is payable at maturity so interest payable is credited.
3 month interest = 39.2 * 0.08 * 3/12 = 0.784million
3.
The note and interest will be payable that was accrued along with the remaining 9 months interest. Total interest is 39.2 * 0.08 = 3.136million
Ответ:
0.2
Explanation:
Data provided in the question
Marginal propensity to consume (MPC) = 0.80
Based on the given information, the marginal propensity to save is
As we know that
Marginal propensity to consume (MPC) + Marginal propensity to save (MPS) = 1
where,
Marginal propensity to consume (MPC) is 0.8
So, the marginal propensity to save is
= 1 - 0.8
= 0.2