The unadjusted trial balance of the Manufacturing Equitable at December 31, 2018, the end of its fiscal year,included the following account balances. Manufacturing’s 2018 financial statements were issued on April 1,2019.Accounts receivable $ 92,500Accounts payable 35,000Bank notes payable 600,000Mortgage note payable 1,200,000Other information:a. The bank notes, issued August 1, 2018, are due on July 31, 2019, and pay interest at a rate of 10%, payable atmaturity.b. The mortgage note is due on March 1, 2019. Interest at 9% has been paid up to December 31 (assume 9% is arealistic rate). Manufacturing intended at December 31, 2018, to refinance the note on its due date with a new10-year mortgage note. In fact, on March 1, Manufacturing paid $250,000 in cash on the principal balanceand refinanced the remaining $950,000.c. Included in the accounts receivable balance at December 31, 2018, were two subsidiary accounts that hadbeen overpaid and had credit balances totaling $18,000. The accounts were of two major customers who wereexpected to order more merchandise from Manufacturing and apply the overpayments to those future purchases.d. On November 1, 2018, Manufacturing rented a portion of its factory to a tenant for $30,000 per year, payablein advance. The payment for the 12 months ended October 31, 2019, was received as required and was credited to rent revenue.Required:1. Prepare any necessary adjusting journal entries at December 31, 2018, pertaining to each item of other information (a–d).2. Prepare the current and long-term liability sections of the December 31, 2018, balance sheet.

The unadjusted trial balance of the Manufacturing Equitable at December 31, 2018, the end of its fiscal year,
included the following account balances. Manufacturing’s 2018 financial statements were issued on April 1,
2019.
Accounts receivable $ 92,500
Accounts payable 35,000
Bank notes payable 600,000
Mortgage note payable 1,200,000
Other information:
a. The bank notes, issued August 1, 2018, are due on July 31, 2019, and pay interest at a rate of 10%, payable at
maturity.
b. The mortgage note is due on March 1, 2019. Interest at 9% has been paid up to December 31 (assume 9% is a
realistic rate). Manufacturing intended at December 31, 2018, to refinance the note on its due date with a new
10-year mortgage note. In fact, on March 1, Manufacturing paid $250,000 in cash on the principal balance
and refinanced the remaining $950,000.
c. Included in the accounts receivable balance at December 31, 2018, were two subsidiary accounts that had
been overpaid and had credit balances totaling $18,000. The accounts were of two major customers who were
expected to order more merchandise from Manufacturing and apply the overpayments to those future purchases.
d. On November 1, 2018, Manufacturing rented a portion of its factory to a tenant for $30,000 per year, payable
in advance. The payment for the 12 months ended October 31, 2019, was received as required and was credited to rent revenue.
Required:
1. Prepare any necessary adjusting journal entries at December 31, 2018, pertaining to each item of other information (a–d).
2. Prepare the current and long-term liability sections of the December 31, 2018, balance sheet.