Grace Herron has just approached a venture capitalist for financing

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P10-13A Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $198,000 at an annual interest rate of 7%. The loan is repayable over 5 years in annual installments of $48,290, principal and interest, due each June 30. The first payment is due June 30, 2014. Grace uses the effective-interest method for amortizing debt. Her ski hill company’s year-end will be June 30.

 

Prepare an amortization schedule for the 5 years, 2013–2018. (Round answers to 0 decimal places, e.g. 125.)

Period

 

Cash
Payment

 

Interest
Expense

 

Principal
Reduction

 

Balance

 

July 1, 2013

         

June 30, 2014

         

June 30, 2015

         

June 30, 2016

         

June 30, 2017

         

June 30, 2018

        

*

* Amount may be off due to rounding.

 

Prepare all journal entries for Grace Herron for the first 2 fiscal years ended June 30, 2014, and June 30, 2015. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

Date

Account Titles and Explanation

Debit

Credit

July 1/13

   

June 30/14

   

June 30/15

   

 

Show the balance sheet presentation of the note payable as of June 30, 2015. (Hint: Be sure to distinguish between the current and long-term portions of the note.) (Round answers to 0 decimal places, e.g. 125.)

 

GRACE HERRON
Balance Sheet (Partial)
June 30, 2015

    
    
    
    

 

 

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