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Promissory notes that require the issuer to make a series of payments consisting of both interest and principal are:

a. Investment notes.

b. Installment notes.

c. Debentures Discounted notes.

d. Indentures

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Egie Boy Cauba
Egie Boy CaubaLv5
2 Feb 2021
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Tony’s favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, “I’ve always wanted to start a camp where families could get away and spend some quality time together. If we just had the money, I know this would be the perfect place.” They called several banks and on January 1, 2014, Great Adventures obtained $570,000, 6%, 9-year installment loan from Summit Bank. Monthly payments of $6,843 are required at the end of each month over the life of the 9-year loan. Each monthly payment of $6,843 includes both interest expense and principal payments (i.e., reduction of the loan amount.)

Late that night Tony exclaimed, "$570,000 for our new camp, this has to be the best news ever.” Suzie snuggled close and said, “There’s something else I need to tell you, Tony, I’m expecting!” They decided right then, if it was a boy, they would name him Venture.


1.
value:
10.00 points
Required information

Required:

1.

Complete the first three rows of an amortization table. (Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Date Cash
Paid Interest
Expense Decrease in
Carrying
Value Carrying
Value
1/1/14 $
1/31/14 $ $ $
2/28/14

References
eBook & Resources
WorksheetDifficulty: Hard
Check my work

2.
value:
10.00 points
Required information

2.

Record the note payable on January 1, 2014, and the first two payments on January 31, 2014, and February 28, 2014. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Date General Journal Debit Credit
Jan.1, 2014
(Click to select)
Notes payable
Accounts receivable
Interest payable
Interest revenue
Notes receivable
Accounts payable
Interest expense
Cash


(Click to select)
Accounts receivable
Accounts payable
Interest expense
Interest revenue
Notes receivable
Cash
Interest payable
Notes payable


Jan.31, 2014
(Click to select)
Notes payable
Interest expense
Interest revenue
Notes receivable
Accounts payable
Cash
Interest payable
Accounts receivable


(Click to select)
Accounts receivable
Interest payable
Notes receivable
Interest revenue
Notes payable
Cash
Accounts payable
Interest expense


(Click to select)
Accounts payable
Interest expense
Interest payable
Interest revenue
Cash
Accounts receivable
Notes receivable
Notes payable


Feb.28, 2014
(Click to select)
Notes receivable
Interest revenue
Interest payable
Accounts receivable
Interest expense
Notes payable
Accounts payable
Cash


(Click to select)
Interest payable
Notes receivable
Notes payable
Interest expense
Cash
Accounts receivable
Interest revenue
Accounts payable


(Click to select)
Accounts payable
Notes receivable
Interest expense
Notes payable
Accounts receivable
Interest revenue
Cash
Interest payable


References
eBook & Resources

Bond Indentures

Bond covenants or indentures are legal documents signed between a bond holder and a bond issuer that is meant to protect the interests of both parties. It specifies in detail the terms and condition of the bond and provides an avenue for arbitration in case of a dispute. The disclosure information shown in the fine print may include an arbitration provision for resolving disputes with an arbitrator thus denying the consumer the opportunity to go to court. Some of the information in the fine print may be unfair or misleading to the average consumer in that some of the details may be coached in technical jargon difficult to understand.

How much control do you think an investor has over bond prices?

Please show ALL work and formulas

Tundra Tots is being liquidated under Chapter 7 of the Bankruptcy Act. Its current balance sheet is shown below. Fixed assets are sold for $25,000,000 and current assets are sold for $18,000,000. All fixed assets are pledged as collateral for mortgage bonds. Subordinated debentures are subordinate only to notes payable. Trustee costs are $500,000. No employee is owed over $2,000.

Sale of current assets 18,000,000
Sale of fixed assets 25,000,000
Trustee costs 500,000
Before Before
Default Balance Sheet Default
Current Assets 26,000,000 Accounts payable 4,000,000
Net fixed assets 50,000,000 Accrued taxes 90,000
Accrued wages 250,000
Notes payable 1,650,000
Total current liabilities 5,990,000
First-mortgage bonds 18,000,000
Second-mortgage bonds 20,000,000
Debentures 15,000,000
Subordinated debentures 14,000,000
Common stock 2,500,000
Retained earnings 510,000
Total assets 76,000,000 Total claims 76,000,000

a. How much will shareholders receive?
b. How much will mortgage bondholders receive?
c. How much will priority creditors receive? Identify the priority creditors.

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