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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Exercise 9-21 Complete the accounting cycle using long-term liability transactions (LO9-2, 9-8)
[The following information applies to the questions displayed below.]
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances:
Debit
$ 11,700
35,000
152,500
72,300
125,000
Accounts
Credit
Cash
Accounts Receivable
Inventory
Land
Buildings
$ 2,300
10, 100
23, 200
205,000
155,900
Allowance for Uncollectible Accounts
Accumulated Depreciation
Accounts Payable
Common Stock
Retained Earnings
Totals
$396,500
$396,500
During January 2021, the following transactions occur:
Borrow $105, 000 from Captive Credit Corporation. The installment note bears interest at 6% annually and
matures in 5 years. Payments
Receive $31, 500 from customers on accounts receivable.
January
$2,030 are required at the end of ead
onth for 6e months.
January
4
January
Pay cash on accounts payable, $16,000.
10
January
Pay cash for salaries, $29,400.
15
January
Firework sales for the month total $196,000. Sales include $65,500 for cash and $130, 500 on account. The cost
of the units sold is $115,000.
30
Pay the first monthly installment of $2,030 related to the $105,000 borrowed on January 1. Round your
interest calculation to the nearest dollar.
January
31
Exercise 9-21 Part 3
3. Prepare an adjusted trial balance as of January 31, 2021.](https://content.bartleby.com/qna-images/question/06485a1e-133d-4c3c-bb98-7255c1ebbbed/e6021639-e0dc-49fc-9f12-6214302d1ef9/buw7f2_thumbnail.png)
Transcribed Image Text:Required information
Exercise 9-21 Complete the accounting cycle using long-term liability transactions (LO9-2, 9-8)
[The following information applies to the questions displayed below.]
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances:
Debit
$ 11,700
35,000
152,500
72,300
125,000
Accounts
Credit
Cash
Accounts Receivable
Inventory
Land
Buildings
$ 2,300
10, 100
23, 200
205,000
155,900
Allowance for Uncollectible Accounts
Accumulated Depreciation
Accounts Payable
Common Stock
Retained Earnings
Totals
$396,500
$396,500
During January 2021, the following transactions occur:
Borrow $105, 000 from Captive Credit Corporation. The installment note bears interest at 6% annually and
matures in 5 years. Payments
Receive $31, 500 from customers on accounts receivable.
January
$2,030 are required at the end of ead
onth for 6e months.
January
4
January
Pay cash on accounts payable, $16,000.
10
January
Pay cash for salaries, $29,400.
15
January
Firework sales for the month total $196,000. Sales include $65,500 for cash and $130, 500 on account. The cost
of the units sold is $115,000.
30
Pay the first monthly installment of $2,030 related to the $105,000 borrowed on January 1. Round your
interest calculation to the nearest dollar.
January
31
Exercise 9-21 Part 3
3. Prepare an adjusted trial balance as of January 31, 2021.
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- On May 22, Jarrett Company borrows 9, 200, signing a 90-day, 7% $9, 200 noteWhat is the journal entry made by Jarrett Company to record the payment of the note on the maturity date? Choice Notes Payable $9,200, credit interest Expense $161 credit Cash $9,039 Notes Payable 9.200 credit Cash $9.200 Debit Notes Payable $9,361, credit Cash $9.361arrow_forwardL. How much interest income should be reported on December 31, 2020 with regards to the note from Company B? 2-2 Notes Receivables The trial balance for BLUE Corporation prepared at December 31, 2020 showed a balance of P4,000,000 for Notes Receivables broken as follows: Notes receivable from Company A Notes receivable from Company B 3,000,000 1,000,000 Total 4,000,000 Additional information: The notes receivable from Company A is a three-year non- interest bearing note, with face value of P3,000,000. The note was received in exchange for a piece of land sold by BLUE on May 1, 2020. The land was carried in the books at the date of sale at P2,600,000. The difference between the face amount of the note and the carrying value of the land was credited to gain on sale of land. The market interest rate for a note of this type is 10%. The notes receivable from Company B bears interest at 10%. The note was received from sale of goods in the normal course of business. The note is dated October…arrow_forwardRakesharrow_forward
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- The transaction below pertains to Boyer Coe Company, whose fiscal year ends December 31. On November 1, 2019 Coe borrowed $25,000 at 6 percent for 6 months. The entry to record the November 1 borrowing transaction would include a: A. Credit to notes payable for $750 B. Credit to notes payable for $24,250 C. Debit to cash for $24,250 D. Debit to cash for $25,000arrow_forwardVishanuarrow_forwardOn November 1, 2021, FDN Trading accepted a 90-day, 8% P45,000,000 note from ABC Co. FN immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN assumes the interest expense associated with this transaction. How much interest expense should FN Trading debit on its records? Calculate the total interest expense and NOT the net interest expense.arrow_forward
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