Answer: Accrued interest on the note payable at the balance sheet date is the carrying amount of the note multiplied by the interest rate on the note. Because the first payment was made 10/1/Year 2, the carrying amount of the note is $2,400,000 ($3,600,000 – $1,200,000). Also, interest has accrued for only 9 months since the first payment. As a result, accrued interest payable is $180,000 [$2,400,000 × 10% × (9 months ÷ 12 months)].
Hahaha it was a typo I swear. I was thinking 180 but first typed 240 for some reason. Maybe I killed too many brain cells in Vegas? It's a delicate balance…
That confused me because it says the note is dated October 1, Year 1.
Florida:
AUD: 73, 81! Thank you Lord!
BEC: 73, 77! Thank you Lord! and WTB
REG: 71, 82! Thank you Lord! and A71
FAR: 72, 78! Thank you God and my Mommy in Heaven!
CPA Excel, Ninja Notes & Audio, Wiley Test Bank, CPAreviewforfree
@NJPRU, I'll say $180,000. Principal payment of $1.2M made in year 2 leaving $2.4M principal remaining. Then I multiplied the 10% annual interest rate by the $2.4M remaining principal, multiplied that by the 9/12 because I counted nine months from 10/1 until 6/30 on my fingers.
@teetee–The note is dated 10/1/1, but they want the accrued interest on 06/30/3 so on 10/1/2 they paid 1.2M plus interest so the balance went down to 2.4 M and then you have to calculate the interest for the 9 months from the time the first payment was made until the end of their fiscal year 06/30/3. We would have been right if the question had asked for the accrued interest on 06/30/2.
Our auditor just agreed to help me with my weak areas after work on Thursday. Yayyyyyyyyyy! He knows this stuff well. It's cutting it a little close, but I took Friday off to have one last full day of review. I really hope he can help with those areas. I want to at least be comfortable with every topic before I walk into the test.
There is actually a CPA motivational quote board on pinterest. Some of these are pretty good. My favorite:
“Every test in our life makes us bitter or better, every problem comes to break us or make us. The choice is ours whether we become VICTIM or VICTOR.” Can't ever have too many motivational quotes, right NJPRU? 🙂
Of course, I'm sure we have all felt this way at least once since studying for the CPA.
Good. You take care of the a.m. quotes and I'll take care of the p.m. quotes. Of course I'll have to throw in a funny one or two as well because that's just me. 🙂
OMG, love those pics CPAmom lmao…I needed that laugh. I am surrounded by notes and just ready to pass out at this point.
Florida:
AUD: 73, 81! Thank you Lord!
BEC: 73, 77! Thank you Lord! and WTB
REG: 71, 82! Thank you Lord! and A71
FAR: 72, 78! Thank you God and my Mommy in Heaven!
CPA Excel, Ninja Notes & Audio, Wiley Test Bank, CPAreviewforfree
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