# Accounting Questions

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Please answer the following questions:
Question 1: On January 1, 2013, Strong Industries borrowed \$100,000 for six years. Strong signed a noninterest-bearing note. Assuming that the market rate of interest is 7 percent on the date the note is made and that interest is compounded annually, what is the face value of the note? What is the amount of interest expense shown on the budgeted income statement for 2013 and 2014? Describe the cash inflows and outflows Strong must plan for with this note.
Question 2: On September 1, 2013 Foley Company borrowed \$12,000. Foley signed a two-year installment note that calls for 8 quarterly payments and a 10 percent interest rate. How much cash will Foley pay each quarter? How much of the first payment will be interest expense and how much will be principal?
Question 3: Clifton, Inc. needs to borrow some money. It prepares a 8-year periodic and lump-sum payment note with a face value of \$100,000 and a face rate of interest of 7 percent paid semiannually. If the market rate of interest is 6 percent, how much money will Clifton receive? How much is the periodic payment? What is the interest expense for the first period? What is the carrying value of the note at the end of the first period?
Question 4: Refer to Question 3. Assume the market rate of interest is 8 percent. If the market rate of interest is 8 percent, how much money will Clifton receive? How much is the periodic payment? What is the interest expense for the first period? What is the carrying value of the note at the end of the first period?
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