Concept explainers
• LO2–4, LO2–5
The Eldorado Corporation’s controller prepares adjusting entries only at the end of the fiscal year. The following adjusting entries were prepared on December 31, 2018:
Debit | Credit | |
Interest expense | 7,200 | |
Interest payable | 7,200 | |
Rent expense | 35,000 | |
Prepaid rent | 35,000 | |
Interest receivable | 500 | |
Interest revenue | 500 |
Additional information:
1. The company borrowed $120,000 on March 31, 2018. Principal and interest are due on March 31, 2019. This note is the company’s only interest-bearing debt.
2. Rent for the year on the company’s office space is $60,000. The rent is paid in advance.
3. On October 31, 2018, Eldorado lent money to a customer. The customer signed a note with principal and interest at 6% due in one year.
Required:
Determine the following:
1. What is the interest rate on the company’s note payable?
2. The 2018 rent payment was made at the beginning of which month?
3. How much did Eldorado lend its customer on October 31?
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Intermediate Accounting
- Al Hajar Co. provides you the following account balances for the year ended on 31 December 2019. Sales Revenue OMR 100,000 Cr. Accounts Receivable OMR 25,000 Dr. Allowance for Doubtful accounts OMR 1000 Cr. Scenario 1 Bad debts are estimated based on the aging schedule given below Aging class Receivable Balance (OMR) Estimate % of uncollectible 0–30 days 15,000 10 31–60 days 5,000 15 61–90 days 3,500 20 Over 90 days 1,500 25 Actual bad debt - OMR 1,100 and amount recovered - OMR 800. Scenario 2 Estimated amount of bad debts - 12% of receivables, Actual bad debt - OMR 1,500 and amount recovered later on - OMR 900. Scenario 3 Estimated amount of bad debts - 3.5% of Sales, Actual bad debt - OMR 1,300 and amount recovered - OMR 1000. Required: For each scenario given above; a)Estimate the uncollectible amounts. b)Pass adjusting entry to record the estimated uncollectible. c)Pass all the journal entries for actual write off and recovery…arrow_forwardProblem 10-22 (AICPA Adapted) Black Company reported accounta payable on December 1 2021 at P4,600,000 before any necessary yoar-end adjustment rolating to the following transactions: On December 27, 2021, Black Company wrote and recorded checks to creditors totaling P2,000,000 causing an overdrat of P500,000 in Black Company's bank account on December 31, 2021. The checks were mniled out on January 10, 2022 On December 28, 2021, Black Company purchaied and received goods for P750,000 terms 2/10, n /30. Black Company, records purchases and accounts payable at net amount. The invoice was recorded and paid January 5, 2022 Goods shipped FOB destination, 5/10, n/30 on December 20, 2021 from a vendor to Black Company were received January 15, 2022. The invoice cost was P325,000. On December 31, 2021, what amount should be reported as accounts payable? a. 7,575,000 b. 7,250,000 c. 7.235,000 d. 7,553,500arrow_forwardBrief Exercise 8-03 a-b At the end of 2021, Larkspur Co. has accounts receivable of $675,100 and an allowance for doubtful accounts of $24,370. On January 24, 2022, it is learned that the company’s receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4,127.(a)Prepare the journal entry to record the write-off. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount (b)What is the cash realizable value of the accounts receivable before the write-off and after the write-off? Before Write-Off After Write-Off Cash realizable value $Enter a dollar amount $Enter a dollar amountarrow_forward
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