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Use the following to answer questions 6 – 10 On August 1“, FLY Tech, an Airline maintenance company, borrows $300,000 cash from Bank of America for working capital. FLY signs a 1 year, 3% promissory note. Interest is payable when the note is paid off. FLY's vear-end is December 31

Use the following to answer questions 6 – 10 On August 1“, FLY Tech, an Airline maintenance company, borrows $300,000 cash from Bank of America for working capital. FLY signs a 1 year, 3% promissory note. Interest is payable when the note is paid off. FLY's vear-end is December 31

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 11EB: Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from...
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Use the following to answer questions 6 – 10 On August 1t, FLY Tech, an Airline maintenance company, borrows $300,000 cash from Bank of America for working capital. FLY signs a 1 year, 3% promissory note. Interest is payable when the note is paid off. FLY's year-end is December 31. How was the loan classified on the company's December 31, year 1 balance sheet? A. Current liability B. Long term liability C. Note disclosure only D. Stockholders’ Equity 6. How was the loan classified on the company's December 31, year 1 statement of cash flow? A. Operating activity B. Investing activity C. Financing activity 7. D. Not shown on the statement of cash flows $ on December 31 of the first year (assume no previous entry was recorded for interest on the loan)? 8. How much interest should be accrued When the note is paid at maturity 2$ how much cash is paid to Bank of America? 9. When the note is paid at maturity in the second accounting year, how much does net income 10. $ decrease?
Transcribed Image Text:Use the following to answer questions 6 – 10 On August 1t, FLY Tech, an Airline maintenance company, borrows $300,000 cash from Bank of America for working capital. FLY signs a 1 year, 3% promissory note. Interest is payable when the note is paid off. FLY's year-end is December 31. How was the loan classified on the company's December 31, year 1 balance sheet? A. Current liability B. Long term liability C. Note disclosure only D. Stockholders’ Equity 6. How was the loan classified on the company's December 31, year 1 statement of cash flow? A. Operating activity B. Investing activity C. Financing activity 7. D. Not shown on the statement of cash flows $ on December 31 of the first year (assume no previous entry was recorded for interest on the loan)? 8. How much interest should be accrued When the note is paid at maturity 2$ how much cash is paid to Bank of America? 9. When the note is paid at maturity in the second accounting year, how much does net income 10. $ decrease?
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