Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 3, Problem 13P
Reversing Entries Thomas Company entered into two transactions involving promissory notes and properly recorded each transaction.
- 1. On November 1, it purchased land at a cost of $8,000. It made a $2,000 down payment and signed a note payable agreeing to pay the $6,000 balance in 6 months plus interest at an annual rate of 10%.
- 2. On December 1, it accepted a $4,200, 3-month, 12% (annual interest rate) note receivable from a customer for the sale of merchandise. On December 31, Thomas made the following related adjustments:
Required:
- 1. Assuming that Thomas uses reversing
entries, prepare journal entries to record:- a. the January 1, reversing entries
- b. the March 1, $4,326 collection of the note receivable
- c. the May 1, $6,300 payment of the note payable
- 2. Assuming instead that Thomas does not use reversing entries, prepare journal entries to record the collection of the note receivable and the payment of the note payable.
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Leach Company borrowed $95,000 cash by issuing a note payable on June 1, Year 1. The note had an 6 percent annual rate of interest
and a one-year term to maturity.
Required:
a. What amount of interest expense will Leach recognize for the year ending December 31, Year 1?
b. Record the issue of notes payable and recognition of interest on December 31, Year 1, in the accounting equation for Year 1.
c. What amount of cash will Leach pay for interest expense in Year 1?
d. What is the amount of interest payable as of December 31, Year 1?
e. What amount of cash will Leach pay for interest expense in Year 2?
f. What amount of interest expense will Leach recognize in Year 2?
g. What is the amount of interest payable as of December 31, Year 2?
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Anne Taylor Company borrowed cash on August 1 of Year 1, by signing a $19,980 (face amount), one-year note payable, due on July 31 of Year 2. The
accounting period of Anne Taylor ends December 31. Assume an effective interest rate of 11%.
a. How much cash should Anne Taylor Company receive from the note on August 1 of Year 1, assuming the note is an interest-bearing note?
$ 0
b. Provide the following entries and reporting amounts:
1. August 1 of Year 1, date of the loan.
2. December 31 of Year 1, adjusting entry.
3. July 31 of Year 2, payment of the note.
⚫Note: Round your answers to the nearest whole dollar.
Date
1. Aug. 1, Year 1
Account Name
Dr.
Cr.
0
0
0
0
To record issue of note.
2. Dec. 31, Year 1
0
0
To record year-end adjusting entry.
3. July 31, Year 2
0
O O
0 0
0
0
0
0
0
00
0
0
To record payment of note.
c. What liability amounts should be shown on the December 31 of Year 1 balance sheet?
Balance Sheet, Dec. 31
Year 1
Current liabilities
Note Payable
0
$
0
d. Answer (a) and…
Prefix Supply Company received a 60-day, 4% note for $46,000 dated July 12 from a customer on account.
Required:
a. Determine the due date of the note.
b. Determine the maturity value of the note. Assume a 360-day year.
c. Journalize the entry to record the receipt of the payment of the note at maturity. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS
Prefix Supply Company
General Ledger
ASSETS
110
Cash
111
Petty Cash
120
Accounts Receivable
129
Allowance for Doubtful Accounts
132
Notes Receivable
141
Merchandise Inventory
145
Office Supplies
146
Store Supplies
151
Prepaid Insurance
181
Land
191
Store Equipment
192
Accumulated Depreciation-Store Equipment
193
Office Equipment
194
Accumulated Depreciation-Office Equipment
LIABILITIES
210
Accounts Payable
211
Salaries Payable
213
Sales Tax Payable
214
Interest Payable
215
Notes Payable
EQUITY…
Chapter 3 Solutions
Intermediate Accounting: Reporting And Analysis
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Ch. 3 - Give examples of transactions that: a. Increase...Ch. 3 - Prob. 12GICh. 3 - Prob. 13GICh. 3 - Prob. 14GICh. 3 - Prob. 15GICh. 3 - Explain and provide examples of deferrals,...Ch. 3 - Prob. 17GICh. 3 - Prob. 18GICh. 3 - Prob. 19GICh. 3 - Prob. 20GICh. 3 - Prob. 21GICh. 3 - What are the major financial statements of a...Ch. 3 - Prob. 23GICh. 3 - Prob. 24GICh. 3 - Prob. 25GICh. 3 - Prob. 26GICh. 3 - Prob. 27GICh. 3 - Prob. 28GICh. 3 - Prob. 29GICh. 3 - What is cash-basis accounting? What must a company...Ch. 3 - On May 1, Johnson Corporation purchased inventory...Ch. 3 - On January 1, Tolson Company purchased a building...Ch. 3 - On July 1, Friler Company purchased a 1-year...Ch. 3 - Prob. 4RECh. 3 - Garcia Company rents out a portion of its building...Ch. 3 - Prob. 6RECh. 3 - Goldfinger Corporation had account balances at the...Ch. 3 - Prob. 8RECh. 3 - For the current year, Vidalia Company reported...Ch. 3 - Use the information in RE3-6, (a) assuming Ringo...Ch. 3 - (Appendix 3.1) Vickelly Company uses cash-basis...Ch. 3 - Financial Statement Interrelationship Draw a...Ch. 3 - Journal Entries Mead Company uses a perpetual...Ch. 3 - Journal Entries The following are selected...Ch. 3 - Adjusting Entries Your examination of Sullivan...Ch. 3 - Adjusting Entries The following are several...Ch. 3 - Adjusting Entries The following partial list of...Ch. 3 - Basic Income Statement The following are selected...Ch. 3 - Periodic Inventory System Raynolde Company uses a...Ch. 3 - Closing Entries Lloyd Bookstore shows the...Ch. 3 - Financial Statements Turtle Company has prepared...Ch. 3 - Worksheet for Service Company Whitaker Consulting...Ch. 3 - Worksheet, Including Inventory Surian Motors...Ch. 3 - Reversing Entries On December 31, 2019, Kellams...Ch. 3 - Special Journals The following are several...Ch. 3 - (Appendix 3.1) Cash-Basis Accounting Puntarelli...Ch. 3 - Adjusting Entries The following information is...Ch. 3 - Prob. 2PCh. 3 - Adjusting Entries Sarah Companys trial balance on...Ch. 3 - Prob. 4PCh. 3 - Errors in Financial Statements At the end of the...Ch. 3 - Journal Entries, Posting, and Trial Balance Luke...Ch. 3 - Effects of Errors: During the current accounting...Ch. 3 - Financial Statements Mackenzie Inc. uses a...Ch. 3 - Prob. 9PCh. 3 - Worksheet Victoria Company has the following...Ch. 3 - Worksheet Devlin Company has prepared the...Ch. 3 - Comprehensive On November 30, 2019. Davis Company...Ch. 3 - Reversing Entries Thomas Company entered into two...Ch. 3 - Reversing Entries On December 31, 2019, Mason...Ch. 3 - Adjusting Entries At the end of 2019, Richards...Ch. 3 - Prob. 16PCh. 3 - Comprehensive (Appendix 3.1) Dawson OConnor is the...
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