Concept explainers
a.
Introduction: Income statement is referred to a statement prepared by the organization to show the amount of expenses incurred and revenue earned during the year. The income statement is prepared to know the amount of
To prepare: The income statement for the month ended January 31, 2017.
b.
Introduction: The statement of
To prepare: The statement of retained earnings for the month ended January 31, 2017.
c.
Introduction: Balance sheet of a company is prepared to calculate the net position of a business. the total balance of liabilities, assets and equity is shown in the balance sheet. It is prepared at the end of a financial year.
To prepare: The balance sheet as of January 31, 2017.
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Using Financial Accounting Information
- Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000 of 10-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of 66,747,178. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.) 3. Determine the total interest expense for 2016.arrow_forwardOn January 1, 2018, 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 firmsto record interest at December 31, 2018.arrow_forwardNeptune Corporation is preparing its December 31, 2018, balance sheet. The following items may be reported as either assets, liabilities or stockholders’ equity. a) Neptune invested $75,000 in an available for sale securities, fair value of which is $95,000. b) On October 1, 2018, the company borrowed $900,000 for 5 years at 8% per year. Interest is to be paid half-yearly on April 1 of every year. c) On December 15, 2018, the company declared a $1.50 per share dividend on the 60,000 shares of common stock outstanding, to be paid on January 25, 2019.arrow_forward
- Tandang Sora Corp. purchased a P5,000,000 ordinary life insurance policy on its president. Tandang Sora is the beneficiary under the policy. The policy year and Tandang Sora's accounting year coincide. Additional data available for the year ended December 31, 2024 are as follows: Cash surrender value, January 1 Cash surrender value, December 31 Annual advance premium paid January 1 Dividend received on July 1 What amount should be reported as life insurance expense for 2024? 348,000 432,000 160,000 24,000arrow_forwardTravel borrowed $33,000 on September 1, 2018, by signing a one-year note payable to State One Bank. Resort's interest expense on the note payable for the remainder of the fiscal year (September through November) is $355arrow_forwardOn January 1, 2018, the Apex Company exchanged some shares of common stock it had been holding as aninvestment for a note receivable. The note principal plus interest is due on January 1, 2019. The 2018 incomestatement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. Thestock’s book value was $16,000. The company’s fiscal year ends on December 31.Required:1. What is the note’s effective interest rate?2. Reconstruct the journal entries to record the sale of the stock on January 1, 2018, and the adjusting entry torecord interest revenue at the end of 2018. The company records adjusting entries only at year-endarrow_forward
- 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_forwardOn January 1, 2021, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2022. The 2021 income statement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. The stock’s book value was $16,000. The company’s fiscal year ends on December 31.Required:1. What is the note’s effective interest rate?2. Reconstruct the journal entries to record the sale of the stock on January 1, 2021, and the adjusting entry to record interest revenue at the end of 2021. The company records adjusting entries only at year-end.arrow_forwardduring the fiscal year ended december 31, duckworth corporation engaged in the following transactions involving notes payable: sept. 16. purchased office equipment from earthtime equipment. the invoice amount was $24,000, and earthtime agreed to accept, as full payment, on 12%, three-month note for the invoice amount. nov. 1. borrowed $100,000 from sandra duckworth, a major corporate stockholder. the corporation issued duckworth a $100,000, 15%, 120-day note payable. dec. 1. purchased merchandise inventory in the amount of $5,000 from teller corporation. teller accepted a 90-day, 14% note as a full settlement of the purchase. duckworth corporation uses a perpetual inventory system. dec. 16. the $24,000 note payable to earthtime equipment matured today. duckworth paid the accrued interest on this note and issued a new 30-day, 16% note payable in the amount of $24,000 to replace the note that matured. instructions: a. prepare journal entries (in general journal form) to record the above…arrow_forward
- During the fiscal year ended December 31, Duckworth Corporation engaged in the following transactions involving notes payable: Sept. 16. Purchased office equipment from Earthtime Equipment. The invoice amount was $24,000, and Earthtime agreed to accept, as full payment, on 12%, three-month note for the invoice amount. Nov. 1. Borrowed $100,000 from Sandra Duckworth, a major corporate stockholder. The corporation issued Duckworth a $100,000, 15%, 120-day note payable. Dec. 1. Purchased merchandise inventory in the amount of $5,000 from Teller Corporation. Teller accepted a 90-day, 14% note as a full settlement of the purchase. Duckworth Corporation uses a perpetual inventory system. Dec. 16. The $24,000 note payable to Earthtime Equipment matured today. Duckworth paid the accrued interest on this note and issued a new 30-day, 16% note payable in the amount of $24,000 to replace the note that matured.arrow_forwardThe following transactions apply to Walnut Enterprises for 2018, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, 2018. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until 2019. Recognized the accrued interest at December 31, 2018. The following transactions apply to Walnut Enterprises for 2019: Paid the balance of the sales tax due for 2018. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, 2019. Paid $102,500 of other operating expenses…arrow_forwardOn Jan. 1, 2010, ABC entered into an insurance contract covering the life of its founder. The P100,000 annual insurance premium is payable at the start of the year. By the end of the fifth year, the insurance will have a cash surrender value and it was as follows for the following years:Year Cash Surrender Value2014 P80,0002015 100,0002016 130,0002017 180,000 What is the journal entry on Dec. 31, 2014 to recognized the cash surrender value and adjust the related accounts? Parenthetical solutions would suffice.arrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning