Concept explainers
Income Statement and
Green Bay Corporation began business in July 2016 as a commercial fishing operation and a passenger service between islands. Shares of stock were issued to the owners in exchange for cash. Boats were purchased by making a down payment in cash and signing a note payable for the balance. Fish are sold to local restaurants on open account, and customers are given 15 days to pay their account. Cash fares are collected for all passenger traffic. Rent for the dock facilities is paid at the beginning of each month. Salaries and wages are paid at the end of the month. The following amounts are from the records of Green Bay Corporation at the end of its first month of operations:
Required
- Prepare an income statement for the month ended July 31, 2016.
- Prepare a balance sheet at July 31, 2016.
- What information would you need about Notes Payable to fully assess Green Bay’s long-term viability? Explain your answer.
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Financial Accounting: The Impact on Decision Makers
- On February 25, 2014, Holden Corp. purchased automobiles and trucks for a total price of $530,000, by borrowing the full balance from the bank to be repaid within 8 years. The bank appraised the automobiles at S196,000 and the trucks at $294,000. Enter an appropriate description, and enter the date in the format dd/mmm (i.e., 15/Jan). General Journal Page GJ2 F Debit Credit Date Account/Explanationarrow_forwardProvide a good accounting form in the solution. Thank you! ABC Corporation established its Poblacion branch in 2018. Merchandise costing P120,000 is shipped to this branch. During the initial year, the home office acquires an equipment for P80,000 to be carried in the branch books, and the branch maintains physical possession and use. The equipment has a useful life of 4 years. The branch sells 60 percent of the inventory for P100,800 on account and subsequently collected half of the amount. The branch remits 80 percent in cash to the Home Office. What is the correct Home Office account balance on the records of the branch?arrow_forwardThe following items were selected from among the transactions completed by Aston Mar-tin Inc. during the current year: Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount. May 1. Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%. 15. Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.) July 14. Paid Audi Company the amount due on the note of May 15. Aug. 16. Purchased merchandise on account from Exige Co., $90,000, terms, n/30. Sept. 15. Issued a 45-day, 6% note for $90,000 to Exige Co., on account. Oct. 28. Paid Spyder Manufacturing Co. the amount due on the note of May 1. 30. Paid Exige Co. the amount owed on the note of September 15. Nov. 16. Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a…arrow_forward
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- On January 1, 2016, Nantucket Ferry borrowed $14,000,000 cash from BankOne and issued a four-year, $14,000,000, 6% note. Interest was payable annually on December 31. Prepare the journal entries for both firms to record interest at December 31, 2016.arrow_forward[The following information applies to the questions displayed below.] The following transactions apply to Ozark Sales for 2018: The business was started when the company received $50,000 from the issue of common stock. Purchased equipment inventory of $176,500 on account. Sold equipment for $197,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $122,000. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. Paid the sales tax to the state agency on $147,000 of the sales. On September 1, 2018, borrowed $20,000 from the local bank. The note had a 7 percent interest rate and matured on March 1, 2019. Paid $5,600 for warranty repairs during the year. Paid operating expenses of $54,500 for the year. Paid $125,300 of accounts payable. Recorded accrued interest on the note issued in transaction no. 6.…arrow_forwardQuestion. Jamaica Corporation carried out the following transactions involving note payable. During the fiscal year ended December 31, 2020. Aug 6 Borrowed $ 15,200 from Tony Stark, issuing to him a 45 da, 14% note payable. Sept. 16 Purchased office equipment from Ikea Company. The invoice amount was $18,800 and Ikea Company agreed to accept as full payment a 3-month, 15% note for the invoice amount. Sept. 20 Paid Tony Stark note plus accrued interest. Nov.1 Borrowed $ 2,35,000 from Nation Commercial Bank at an interest rate of 12% per annum; signed a 90-days note payable for $ 2,42,256, which included a $7,056 interest charge in the face amount. Dec.1 Purchased merchandise in the amount of $13,000 from Stephens & Co. Gave in settlement a 60-day note nearing interest at 15% (Perpetual inventory system is deployed). Dec. 16 The $18,800 note payable to Ikea Company matured today. Paid the interest accrued and issued new 30-days, 12% note to replace the maturing…arrow_forward
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