S3-2. (Learning Objective 1: Explain how accrual accounting differs from cash-basisaccounting) Portage Corporation began 2018 owing notes payable of $4.0 million. During2018, Portage borrowed $1.9 million on notes payable and paid off $1.7 million of notespayable from prior years. Interest expense for the year was $1.1 million, including $0.2 millionof interest payable accrued at December 31, 2018.Show what Portage should report for these facts on the following financial statements:1. Income statement for 2018a. Interest expense2. Balance sheet as of December 31, 2018a. Notes payableb. Interest payable
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
S3-2. (Learning Objective 1: Explain how accrual accounting differs from cash-basis
accounting) Portage Corporation began 2018 owing notes payable of $4.0 million. During
2018, Portage borrowed $1.9 million on notes payable and paid off $1.7 million of notes
payable from prior years. Interest expense for the year was $1.1 million, including $0.2 million
of interest payable accrued at December 31, 2018.
Show what Portage should report for these facts on the following financial statements:
1. Income statement for 2018
a. Interest expense
2. Balance sheet as of December 31, 2018
a. Notes payable
b. Interest payable
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