Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 4, Problem 4.7P
Preparing the
Required
- a. Journalize and
post adjusting journal entries based on the following additional information (omit explanations): - ■ At December 31, interest in the amount of $2,600 has accrued on the note payable but has not yet been recorded. This amount will be paid on January 31, 2019.
- ■ The rent payment made on February 28 was for a 12-month lease covering March 1, 2018, to February 29, 2019.
- ■ Straight-line
depreciation for the full year should be recorded on the equipment purchased on February 1. The equipment has a 15-year life and no residual value. - ■ A total of $6,000 of supplies remains on hand at the end of the year.
- ■ Wage payments in the amount of $62,000 must be accrued at year-end.
- ■ On December 14, Tides received a utilities bill in the amount of $6,200 for the month of November that has not yet been recorded. The amount will be paid in January 2019.
- b. Prepare an adjusted trial balance as of December 31.
- c. Prepare an income statement, a statement of shareholders’ equity, and a
balance sheet .
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for
three years.
Rick's had no significant economic incentive as of the beginning of the lease to exercise the three-year extension option. Annual
lease payments are $24,000 due on December 31 of each year, calculated by the lessor using a 7% discount rate.
⚫The expected useful life of the asset is nine years, and its fair value is $180,000.
Assume that at the beginning of the third year, January 1, 2026, Rick's had made significant improvements to the truck whose
cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was
"reasonably certain."
.The relevant interest rate at that time was 8%.
Note: Use tables, Excel, or a financial calculator. (EV of $1, PV of $1. FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1)
Required:
1. Prepare the journal entry, if any, on January 1 and on December 31 of the…
On 1.7.2019 XY company received
rental revenue in advance from
customer of OMR 3600 for two years.
in the journal entry, the credit side is:
Select one:
a. Accrued rent 3600
b. Unearned rental revenue 3600
O c. Accrued rent 3600
O d. Unearned rental revenue 1800
e. Rent outstanding 3600
On January 1, 2021, LLB Industries borrowed $400,000 from Trust Bank by issuing a two-year, 8% note, with interest payable quarterly.
LLB entered into a two-year interest rate swap agreement on January 1, 2021, and designated the swap as a fair value hedge. Its intent
was to hedge the risk that general interest rates will decline, causing iPhone USB ue of its debt to increase. The agreement called for the
company to receive payment based on a 8% fixed interest rate on a notional amount of $400,000 and to pay interest based on a
floating interest rate. The contract called for cash settlement of the net interest amount quarterly.
Floating (LIBOR) settlement rates were 8% at January 1, 6% at March 31, and 4% June 30, 2021. The fair values of the swap are quotes
obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below.
Fair value of interest rate swap
Fair value of note payable
January 1
0
$400,000
Required:
1. Calculate the net cash…
Chapter 4 Solutions
Intermediate Accounting (2nd Edition)
Ch. 4 - Prob. 4.1QCh. 4 - ShoeBuy uses reversing entries for events such as...Ch. 4 - What is equity? What are the three components of...Ch. 4 - Prob. 4.4QCh. 4 - Will all transactions have a dual effect on the...Ch. 4 - Prob. 4.6QCh. 4 - What is meant by the term normal balance? Provide...Ch. 4 - Why is the general journal referred to as the book...Ch. 4 - Are account balances found in the general ledger?...Ch. 4 - What is the purpose of an unadjusted trial...
Ch. 4 - Explain the difference between the accrual basis...Ch. 4 - Under the accrual basis of accounting when do...Ch. 4 - Why are adjusting journal entries made? When do...Ch. 4 - What is a deferred revenue? When will the full...Ch. 4 - What is the purpose of the adjusted trial...Ch. 4 - Which statements can be prepared from the adjusted...Ch. 4 - Prob. 4.17QCh. 4 - Jefferson, CPAs provides accounting services for a...Ch. 4 - Gates Accounting Services (GAS), a sole...Ch. 4 - Prob. 4.3MCCh. 4 - State University sold all of its basketball...Ch. 4 - Prob. 4.5MCCh. 4 - Sampson Manufacturing Company (SMC) has an empty...Ch. 4 - On July 15, Year 1, Southeastern University hired...Ch. 4 - Embree Corp. purchased a four-year insurance...Ch. 4 - The Cougars football team sells season tickets in...Ch. 4 - Prob. 4.10MCCh. 4 - Prob. 4.1BECh. 4 - Transaction Analysis. Florences Floral...Ch. 4 - Journal Entries. Using the information provided in...Ch. 4 - Transaction Analysis; Journal Entries. Cals...Ch. 4 - Transaction Analysis; Journal Entries. Using the...Ch. 4 - Journal Entries; T-accounts. Using the information...Ch. 4 - Retained Earnings. In its first year of...Ch. 4 - Retained Earnings. Using the information provided...Ch. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Adjusting Journal Entries. Barnard and Associates...Ch. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - Closing Entries. Using the information provided in...Ch. 4 - Closing Entries. At year-end Nelsons Nursery, Inc...Ch. 4 - Closing Entries. Readers, Inc., an online...Ch. 4 - Adjusting Journal Entries. Barnard and Associates...Ch. 4 - Prob. 4.20BECh. 4 - Adjusting Journal Entries. Gerhard News collects...Ch. 4 - Prob. 4.22BECh. 4 - Prob. 4.23BECh. 4 - Prob. 4.24BECh. 4 - Transaction Analysis. The following transactions...Ch. 4 - Prob. 4.2ECh. 4 - Transaction Analysis; Journal Entries. Master Mind...Ch. 4 - Prob. 4.4ECh. 4 - Prob. 4.5ECh. 4 - Posting to the General Ledger. Using the...Ch. 4 - Preparing Journal Entries in the General Journal....Ch. 4 - Preparing the T-accounts. Using the information...Ch. 4 - Transaction Analysis: Journal Entries and Posting...Ch. 4 - Transaction Analysis: Journal Entries and Posting...Ch. 4 - Prob. 4.11ECh. 4 - Adjusting Journal Entries: T-accounts. Fanatical...Ch. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Prob. 4.16ECh. 4 - Prob. 4.17ECh. 4 - Adjusting Journal Entries; Adjusted Trial Balance....Ch. 4 - Preparing Financial Statements. Using the adjusted...Ch. 4 - Prob. 4.20ECh. 4 - Prob. 4.21ECh. 4 - Closing Entries. Diane s Dairy Sales Delivery...Ch. 4 - Prob. 4.23ECh. 4 - Prob. 4.24ECh. 4 - Transaction Analysis; Journal Entries; Adjusting...Ch. 4 - Transaction Analysis; Journal Entries; Adjusting...Ch. 4 - Journal Entries; Post to the General Ledger;...Ch. 4 - Prob. 4.4PCh. 4 - Prob. 4.5PCh. 4 - Journal Entries; Post to the General Ledger;...Ch. 4 - Preparing the Trial Balance; Adjusting Journal...Ch. 4 - Transaction Analysis; Journal Entries; Adjusting...Ch. 4 - Closing Process. Using the information in P4-6 and...Ch. 4 - Closing Process. Sherlock Locksmiths, Inc has the...Ch. 4 - Transaction Analysis; Journal Entries, Posting,...Ch. 4 - Transaction Analysis; Journal Entries, Posting,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2019: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet, assuming that the current portion of the note payable is 50,000. 4. Briefly explain how multiple-step and single-step income statements differ.arrow_forwardPrepare journal entries to record the following transactions. Create a T-account for Interest Payable, post any entries that affect the account, and tally the ending balance for the account (assume Interest Payable beginning balance of $2,500). A. March 1, paid interest due on note, $2,500 B. December 31, interest accrued on note payable, $4,250arrow_forwardPrepare journal entries to record the following transactions. Create a T-account for Accounts Payable, post any entries that affect the account, and calculate the ending balance for the account. Assume an Accounts Payable beginning balance of $7,500. A. May 12, purchased merchandise inventory on account. $9,200 B. June 10, paid creditor for part of previous months purchase, $11,350arrow_forward
- UNCOLLECTIBLE ACCOUNTSALLOWANCE METHOD Lewis Warehouse used the allowance method to record the following transactions, adjusting entries, and closing entries during the year ended December 31, 20--: Selected accounts and beginning balances on January 1, 20--, are as follows: REQUIRED 1. Open the three selected general ledger accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal (page 6). After each entry, post to the appropriate selected accounts. 3. Determine the net realizable value as of December 31, 20--.arrow_forwardUse the information in RE3-6, (a) assuming Ringo Company makes reversing entries, prepare the reversing entry on January 1, and the journal entry to record the payment of the note on April 1; and (b) assuming Ringo does not make reversing entries, prepare the journal entry to record the payment of the note on April 1.arrow_forwardOn January 1, 2019, Northern Manufacturing Company bought a piece of equipment by signing a non-interest-bearing $80,000, 1-year note. The face value of the note includes the price of the equipment and the interest. The effective interest rate is an annual rate of 16%, and the note is to be paid in four $20,000 quarterly installments on March 31, June 30, September 30, and December 31. The price of the equipment is the present value of the four payments discounted at the effective interest rate.arrow_forward
- Journal entries and trial balanceElite Realty acts as an agent in buying, selling, renting, and managingreal estate. The unadjusted trial balance on March 31, 2019, follows: (attached) The attached business transactions were completed by Elite Realtyduring April 2019: Instructions1. Record the April 1, 2019, balance of each account in the appropriatebalance column of a four-column account, write Balance in the itemsection, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journalbeginning on Page 18. Journal entry explanations may be omitted.3. Post to the ledger, extending the account balance to the appropriatebalance column after each posting.4. Prepare an unadjusted trial balance of the ledger as of April 30, 2019. 5. Assume that the April 30 transaction for salaries and commissionsshould have been $19,100. (a) Why did the unadjusted trial balance in (4)balance? (b) Journalize the correcting entry. (c) Is this error…arrow_forwardOn January 1, 2022, Ivanhoe Company issued $322,500, 7%, 5-year bonds at face value. Interest is payable annually on January 1. (a) ✓ Your answer is correct. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Jan. 1, 2022 Account Titles and Explanation Cash Bonds Payable Debit 322500 Credit 322500 Ararrow_forwardYou have been provided with the following trial balance of Comvita for year ended 31st March and the management have requested you to apply accounting principles to prepare balance sheet and income statement for year ending 31st March 2019 and based on it provide an financial statement analysis reflecting the financial position of the Comvita to inform internal and external stakeholders. Trial Balance for Comvita Year Ended March 31, 2019 All figures are in ‘000 Account Name Debt Account Name Credit Accounting Fee 9000 Accounts payable 63600 Accounts receivable 286650 Accumulated Depreciation – Motor Vehicle 30000 Advertising 6000 Accumulated Depreciation – Office Equipment 6000 Bad Debts 1500 Mortgage-non current 282600 Bank 60240 Discount Received 31200 Bank Fees 300 Allowance for Doubtful Debts 2865 Freight Out 36000 Retained earnings 1365000 Cost of goods sold 630000 Sales 1218300…arrow_forward
- HELP ME PREPARE A CLASSIFIED BALANCE SHEET AT DEC.31,2019. THE NOTE PAYABLE HAS A STATED INTEREST RATE OF 6% AND THE PRINCIPAL AND INTEREST ARE DUE ON NOV.6,2021 ?? Natalie had a very busy December. At the end of the month, after journalizing and posting the December transactions and adjusting entries, Natalie prepared the following adjusted trial balance. COOKIE CREATIONSAdjusted Trial BalanceDecember 31, 2019 Debit Credit Cash $1,460 Accounts Receivable 1,085 Supplies 430 Prepaid Insurance 1,500 Equipment 1,500 Accumulated Depreciation—Equipment $50 Accounts Payable 95 Salaries and Wages Payable 69 Interest Payable 20 Unearned Service Revenue 370 Notes Payable 2,500 Owner’s Capital 990 Owner’s Drawings 620 Service Revenue 5,588 Salaries and Wages Expense 1,247 Utilities Expense 155…arrow_forwardOn July 31, 202O, Teal Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Teal issued a $282,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $177,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Teal made a final $105,000 payment to Minsk. Other than the note to Netherlands, Teal's only outstanding liability at December 31, 2020, is a $28,900, 8%, 6-year note payable, dated January 1, Q Ace Qu Ac 2017, on which interest is payable each December 31. Vie Ac Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020. Que Accou…arrow_forwardOn the 1.7.2019 XY company received rental revenue in advance from customers of OMR 2400 for two years. in the journal entry, the credit side is: Select one: a. None of These b. Prepaid rent 2400 c. unearned revenue 2400 d. Accrued rent 2400.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY