Problem:
Tuesday Morning Corporation operates a chain of discount retail stores. The company purchases closeout merchandise at prices generally ranging from 10% to 50% of the normal wholesale price and sells the merchandise at prices that are 50% to 80% lower than retail prices generally charged by department and specialty stores. The following is information taken from a recent Tuesday Morning annual report.
Required:
1. What was the current portion of Tuesday Morning’s mortgage payable at the end of Year 1?
2. How much did Tuesday Morning pay in cash to reduce its mortgage payable during Year 2?
3. Explain the difference between your answer to requirement 1 and your answer to requirement 2.
4. What are the components of the current portion of the mortgage payable as of the end of Year 2?
5. Assume that the next quarterly installment on the industrial development bond is due on March 31, Year 3. Prepare a journal entry to record the installment payment and any interest. Assume that the effective interest rate for the bond is 14% per year.
6. The company has a mortgage note payable for $1,794,000 that comes due on April 30, Year 3. Suppose that this note is paid by the signing of a new 14% note for the amount due. Prepare the April 30, Year 3, journal entry to record this refinancing of the old note.
7. Instead of refinancing the note, suppose the company pays the principal along with any remaining interest on April 30, Year 3. Prepare a journal entry to record this cash payment .
The information is enclosed below. Please find attachment.
Attachment:- Tuesday Morning Corporation.rar