On the First Day of the Fiscal Year, Hawthorne Company

question 95

Multiple Choice

On the first day of the fiscal year, Hawthorne Company obtained an $88,000, 7-year, 5% installment note from Sea Side Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would record to make the first annual payment due on the note would include a

• A) debit to cash for $15,208
• B) credit to notes payable for $10,808
• C) debit to interest expense for $4,400
• D) debit to notes payable for $15,208

Understand and apply basic principles of time value of money in financial calculations involving simple interest, compound interest, and effective rate calculations.

Solve problems involving investment calculations including present and future values.

Evaluate expressions involving multiple steps of arithmetic and algebraic manipulations.

Apply mathematical concepts in financial contexts to solve practical problems.

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