Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 9, Problem 45BP
To determine
Journalize the liabilities transactions.
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year-end.
3. Journalize the company's payment of the note plus interest on December 31, 2018.
S11-5 Determining current portion of long-term note payable
Learning Objective 1
On January 1, Irving Company purchased equipment of $280,000 with a long-term note
payable. The debt is payable in annual installments of $56,000 due on December 31 of
each year. At the date of purchase, how will Irving Company report the note payable?
o the
Learning Obiective 2.
C11
Learning Objective 6: Apply GAAP for notes receivable) Markley Foodscompleted the following selected transactions.2018Oct 31 Sold goods to Basic Foods, receiving a $30,000, three-month, 5.25% note. (Youdo not need to make the cost of goods sold journal entry for this transaction.)Dec 31 Made an adjusting entry to accrue interest on the Basic Foods note.2019Jan 31 Collected the Basic Foods note.Nov 11 Loaned $15,800 cash to Straord Shops, receiving a 90-day, 10.0% note.Dec 31 Accrued the interest on the Straord Shops note.Requirements1. Record the transactions in Markley Foods’ journal. Assume that no sales returns areexpected. Round all amounts to the nearest dollar. Explanations are not required.2. Show what Markley Foods will report on its comparative classified balance sheet atDecember 31, 2019, and December 31, 2018, for Notes Receivable and Interest Receivable.
Learning Objective 1, 2, 3, 4: Record liability-related transactions) The followingtransactions of Smooth Sounds Music Company occurred during 2018 and 2019:2018Mar 3 Purchased a piano (inventory) for $65,000, signing a six-month, 8%note payable.May 31 Borrowed $105,000 on an 6% one-year note payable.Sep 3 Paid the six-month, 8% note at maturity.Dec 31 Accrued warranty expense, which is estimated at 1.5% of sales of $193,000.31 Accrued interest on the outstanding note payable.2019May 31 Paid the outstanding note payable at maturity.Requirement1. Record the transactions in Smooth Sounds’ journal. Explanations are not required
Chapter 9 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 9.A - Calculate employee payroll (Learning Objective 8)...Ch. 9.A - Calculate net pay (Learning Objective 8) 5-10 min....Ch. 9.A - Employer payroll costs (Learning Objective 8) 5-10...Ch. 9.A - Prob. 4AECh. 9.A - Prob. 5AECh. 9.A - Prob. 6AECh. 9.A - Prob. 7BECh. 9.A - Prob. 8BECh. 9.A - Calculating gross and net pay (Learning Objective...Ch. 9.A - Calculating gross and net pay (Learning Objective...
Ch. 9.A - Calculating gross and net pay (Learning Objective...Ch. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - What is the distinguishing feature of the...Ch. 9 - Prob. 6DQCh. 9 - Will interest expense be more than, less than, or...Ch. 9 - Prob. 8DQCh. 9 - What are the differences between an operating...Ch. 9 - Prob. 10DQCh. 9 - Known liabilities of uncertain amounts should be...Ch. 9 - Prob. 2SCCh. 9 - Prob. 3SCCh. 9 - Prob. 4SCCh. 9 - Which term is used to describe an unsecured bond?...Ch. 9 - Prob. 6SCCh. 9 - Plavix Corporations bonds payable carry a stated...Ch. 9 - Prob. 8SCCh. 9 - Martin s bonds pay interest semiannually on July 1...Ch. 9 - Prob. 10SCCh. 9 - Prob. 11SCCh. 9 - Prob. 12SCCh. 9 - Prob. 1SECh. 9 - Prob. 2SECh. 9 - Prob. 3SECh. 9 - Prob. 4SECh. 9 - Prob. 5SECh. 9 - Prob. 6SECh. 9 - Bond terms (Learning Objective 5) 5-10 min. Match...Ch. 9 - Determining the issue price for bonds (Learning...Ch. 9 - Prob. 9SECh. 9 - Prob. 10SECh. 9 - Accounting for bonds (Learning Objective 5) 15-20...Ch. 9 - Prob. 12SECh. 9 - Prob. 13SECh. 9 - Prob. 14SECh. 9 - Prob. 15SECh. 9 - Prob. 16AECh. 9 - Accounting for notes payable (Learning Objective...Ch. 9 - Prob. 18AECh. 9 - Prob. 19AECh. 9 - Prob. 20AECh. 9 - Prob. 21AECh. 9 - Prob. 22AECh. 9 - Prob. 23AECh. 9 - Classifying notes payable as current or long-term...Ch. 9 - Disclosing liabilities on a balance sheet...Ch. 9 - Prob. 26AECh. 9 - Prob. 27BECh. 9 - Prob. 28BECh. 9 - Prob. 29BECh. 9 - Prob. 30BECh. 9 - Prob. 31BECh. 9 - Prob. 32BECh. 9 - Prob. 33BECh. 9 - Prob. 34BECh. 9 - Classifying notes payable as current or long-term...Ch. 9 - Prob. 36BECh. 9 - Prob. 37BECh. 9 - Prob. 38APCh. 9 - Prob. 39APCh. 9 - Prob. 40APCh. 9 - Prob. 41APCh. 9 - Prob. 42APCh. 9 - Prob. 43APCh. 9 - Prob. 44APCh. 9 - Prob. 45BPCh. 9 - Prob. 46BPCh. 9 - Prob. 47BPCh. 9 - Prob. 48BPCh. 9 - Prob. 49BPCh. 9 - Prob. 50BPCh. 9 - Prob. 51BPCh. 9 - Prob. 1CECh. 9 - Prob. 1CPCh. 9 - Prob. 1CFSAPCh. 9 - Prob. 1EIACh. 9 - Case 2. Sherry Talbot, the CEO of Talbot...Ch. 9 - Prob. 1FACh. 9 - Prob. 1IACh. 9 - Small-Business Analysis Purpose: To help you...Ch. 9 - Prob. 1WC
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- Learning Objective 6: Apply GAAP for notes receivable) Garrett Meals completedthe following selected transactions:2018Oct 31 Sold goods to Rose Foods, receiving a $32,000, three-month 5.5% note. (You dodo not need to make the cost of goods sold journal entry for this transaction.)Dec 31 Made an adjusting entry to accrue interest on the Rose Foods note.2017Jan 31 Collected the Rose Foods note.Nov 11 Loaned $15,800 to Franklin Shops, receiving a 90-day, 9.75% note.Dec 31 Accrued the interest on the Franklin Shops note.Requirements1. Record the transactions in Garrett Meals’ journal. Assume that no sales returns areexpected. Round all amounts to the nearest dollar. Explanations are not required.2. Show what Garrett Meals will report on its comparative classified balance sheet atDecember 31, 2019, and December 31, 2018, for Notes Receivable and Interest Receivablearrow_forward(Learning Objective 5: Apply GAAP to uncollectible receivables) At December 31,2018, before any year-end adjustments, the Accounts Receivable balance of HamptonCompany, Inc., is $330,000. The Allowance for Uncollectible Accounts has a $15,400 creditbalance. Hampton prepares the following aging schedule for Accounts Receivable:Age of AccountsTotal Balance 1–30 Days 31–60 Days 61–90 Days Over 90 Days$330,000 $100,000 $70,000 $30,000Estimated uncollectible 0.6% 3.0% 5.0%$130,00040.0%Requirements1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowanceaccount adequate? Too high? Too low?2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.3. Show how Hampton will report Accounts Receivable on its December 31 balance sheet.arrow_forward(Learning Objective 3: Account for a short-term note payable) Jamison SportsAuthority purchased inventory costing $25,000 by signing a 12%, six-month, short-term notepayable. The purchase occurred on January 1, 2018. Jamison will pay the entire note (principaland interest) on the note’s maturity date of July 1, 2018. Journalize the company’s (a) purchaseof inventory and (b) payment of the note plus interest on July 1, 2018.arrow_forward
- (Learning Objective 6: Apply GAAP for notes receivable) Record the followingnote receivable transactions in the journal of Windham Golf. How much interest revenue didWindham earn this year? Use a 365-day year for interest computations, and round interestamounts to the nearest dollar. Windham Golf has a December 31 fiscal year-end.1 Loaned $17,000 cash to Jill Wateman on a one-year, 8% note.6 Performed service for Fairway Pro, receiving a 90-day, 10% note for$14,000.16Company.31 Accrued interest revenue for the year.Received a $5,000, six-month, 5% note on account from Paulsonarrow_forward(Learning Objective 4: Record and report current liabilities) Travis Publishingcompleted the following transactions for one subscriber during 2018:Oct 1 Sold a one-year subscription, collecting cash of $1,800, plus sales tax of 10%.The subscription will begin on October 1.Nov 15 Remitted (paid) the sales tax to the state of South Carolina.Dec 31 Made the necessary adjustment at year-end.Requirement1. Journalize these transactions (explanations not required). Then report any liability on thecompany’s balance sheet at December 31, 2018.arrow_forward(Learning Objective 5: Apply GAAP for uncollectible receivables) AtDecember 31, 2018, Concord Travel Agency has an Accounts Receivable balance of $87,000.Allowance for Uncollectible Accounts has a credit balance of $880 before the year-end adjustment. Service revenue (all on account) for 2018 was $800,000. Concord estimates that itsuncollectible-account expense for the year is 3% of service revenue. Make the year-end entryto record uncollectible-account expense. Show how Accounts Receivable and Allowance forUncollectible Accounts are reported on the balance sheet at December 31, 2018arrow_forward
- (Learning Objective 5: Evaluate collectibility using the allowance for uncollectibleaccounts) During its first year of operations, Spring Garden, Inc., had sales of $439,000, all onaccount. Industry experience suggests that Spring Garden’s uncollectibles will amount to 4% ofcredit sales. At December 31, 2018, accounts receivable total $59,000. The company uses theallowance method to account for uncollectibles.1. Make Spring Garden’s journal entry for uncollectible-account expense using thepercent-of-sales method.2. Show how Spring Garden should report accounts receivable on its balance sheet atDecember 31, 2018.arrow_forward(Learning Objective 3: Account for a short-term note payable) On June 1, 2019,Franklin Company purchased inventory costing $90,000 by signing an 8%, nine-month,short-term note payable. Franklin will pay the entire note (principal and interest) on the note’smaturity date. Journalize the company’s (a) purchase of inventory and (b) accrual of interest onthe note payable on December 31, 2019.arrow_forward(Learning Objective 6: Account for notes receivable)1. Compute the amount of interest during 2018, 2019, and 2020 for the following notereceivable: On May 31, 2018, Wyoming State Bank loaned $240,000 to Lindsey Weston ona two-year, 8% note.2. Which party has a/ana. note receivable?b. note payable?c. interest revenue?d. interest expense?3. How much in total would Wyoming State Bank collect if Lindsey Weston paid off the noteearly on November 30, 2018?arrow_forward
- During its first year of operations, Fall Wine Tour earned net credit sales of $311,000. S9-6 Applying the allowance method (percent-of-sales) to account for Industry experience suggesis ibst bad debts will amount to 3% of net credit sales. At December 31, 2018, acceanis receivable total $44,000. The company uses the uncollectibles Learning Objective 3 of operationsS, Fall Wine Tour earned net credit sales of $311,000. During its first year Industry experience Ima sember 31, 2018, accCRIS 2EcEivable total $44,000. The company uses the suggestä tbst bad debts will amount to 3% of net credit sales. ollowance method to accoint icr ancollectibles. Requirements 1. Journalize Fall Wine Tour's kad Debts Expense using the percent-of-sales method. 2. Show how to report accounts receivable on the balance sheet at December 31. 2018. for Learning Objectivearrow_forward1. Joy’s Bar and Grill completed the following note-payable transactions: 2020 Aug. 1 Purchased kitchen equipment costing $60,000 by issuing a one-year, 5% note. Dec. 31 Accrued interest on the note payable. 2021 Aug. 1 Paid the note payable at maturity. Answer these questions for Joy’s Bar and Grill: 1. How much interest expense must be accrued at December 31, 2020? I don't understand the month parts, 5/12 for example as part of the answer, please explain, I'm confused. 2. Determine the amount of Joy’s final payment on July 31, 2021. 3. How much interest expense will Joy’s report for 2020 and for 2021?arrow_forwardP9-31A Accounting for notes receivable and accruing interest Learning Objective 4 1. Note 3 Dec. 18, 2016 Cathy Realty loaned money and received the following notes during 2016. Note Date Principal Amount Interest Rate Term (1) Jun. 1 $ 18,000 8% 1 year (2) Sep. 30 24,000 12% 6 months (3) Oct. 19 10,000 9% 60 days Requirements 1. Determine the maturity date and maturity value of each note. 2. Journalize the entries to establisheach Note Receivable and to record collection of principal and interest at maturity. Include a single adjusting entry on December 31, 2016, the fiscal year-end, to record accrued interest revenue on any applicable note. Explanations are not required.arrow_forward
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