On February 1 of Year 1, Karlla Company received $100,000 cash from a one-year bank loan. The interest rate on the loan is 8%. No payments are due on the loan until January 31 of Year 2. Prepare the ADJUSTING journal entry necessary on December 31 with respect to this loan.

On February 1 of Year 1, Karlla Company received $100,000 cash from a one-year bank loan. The interest rate on the loan is 8%. No payments are due on the loan until January 31 of Year 2. Prepare the ADJUSTING journal entry necessary on December 31 with respect to this loan.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 10RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...

See similar textbooks

Related questions

Q: Following are the transactions for Valdez Services. The company paid $500 cash for payment on a…

A: A journal entry is a process of recording or maintaining track of any financial or non-financial…

Q: Use the relevant items from the list below to prepare the balance sheet for Company ODC as at 31…

A: Balance sheet is the financial statement which is prepared by the entity for the purpose of…

Q: interest rate needed for the sinking fund

A: A sinking fund is actually an account set up with the goal of saving a desired amount of money as a…

Q: Software and hardware for optimizing the cell design of robotic picking lines have an installed cost…

A: Straight line rate of depreciation :— It is calculated by dividing 1 by useful life of asset.…

Q: Annual Costs of Operating Each Product Line Sales in units Sales in dollars Unit-level costs: Cost…

A: A company uses certain processes or methods to decrease its liabilities or business operating costs.…

Q: You work as a freelance accounting professional and have been recently engaged by the auditors of…

A: An income statement, also known as a profit and loss statement or P&L, is a financial statement…

Q: Find the operating cash flow for the year for Monisan and Sons if it had sales revenue of…

A: Operating cash flow measures the amount of funds generated by a company's regular business…

Q: Walker Corp. enters into a contract with a customer to build an apartment building for $910,000. The…

A: The compensation for which an entity anticipates being entitled in exchange for transferring…

Q: Kinney Company incorporated on May 1, of this year. Below you will find the company's financial data…

A: Income statement includes the details of revenue and expenses which shows the result in net income…

Q: Describe how total variable costs and unit variable costs behave with changes in the level of…

A: Cost behaviour defines the changes in cost based on level of activity or production.some cost have…

Q: On January Corporation 1, 2021, Sole Man Shoe Repair issued 16,000 of its 9%, $1,000 bonds at 97.…

A: Bonds payable is one of the liability of the business on which regular interest payments needs to be…

Q: Jeremy (unmarried) earned $101,000 in salary and $7,000 in interest income during the year. Jeremy's…

A: The net amount of income on which tax is levied or calculated using the proper tax schedules is…

Q: How much are total expenses for January? $2362360 $2735240 $2341120 None of the answer choices are…

A: Retained earnings are the cumulative net earnings of a company. It should be noted that retained…

Q: What are goods "in transit" and good in "consignment"? Why are they must be considered in light of…

A: Answer:- Goods meaning:- Anything can be considered a good, including merchandise, suppliers, raw…

Q: Examine the information below and determine whether the corporations are associated. State the…

A: Associates refers to the arrangement where parents hold at least 20% to 50% shares in the associate…

Q: Capital account transactions are not affected by Select one: a. Investment diversification

A: Balance sheet is the representation of financial position of the company tha includes the assets,…

Q: after a useful life of 10 years. Your answers are correct. the formulas, determine the depreciation…

A: Answer : Part a. Straight line depreciation = ($1,070,000 - $66,000) / 10 = $100,400 Book value at…

Q: Use the relevant items from the list below to prepare the balance sheet for Company ODC as at 31…

A: A balance sheet shows a company's operating and financial position over a specific period of time,…

Q: [The following information applies to the questions displayed below.]

A: Cash flow statement represents the cash inflow and cash outflow of the company that involves the…

Q: Annual Costs of Operating Each Product Line Sales in units Sales in dollars Unit-level costs: Cost…

A: Product-line earnings statement represents a summary of earnings and costs of each product line run…

Q: Job Number 10 11 12 13 14 (a) April May $4,560 $3,920 3,600 1,040 April 30 May 31 June 3,440 $1,760…

A: Work in Process Inventory Work in-process inventory refers to partially…

Q: ute ROI for Division B. b. Compute residual income for Division A. c. Division B could increase its…

A: Companies invest in the projects to get the sufficient return on investment and create value for…

Q: Use the following data to compute total manufacturing costs for the month: Sales commissions $…

A: Sales commissions, depreciation office equipment, corporate office salaries are period costs, hence…

Q: An initial investment of $60,000 in Novak's Bunks is expected to pay off greatly-but not equally-in…

A: The formula for ARR: ARR=Average net incomeInitial investment×100

Q: Required information PA5-2 (Algo) Preparing a Bank Reconciliation and Journal Entries and Reporting…

A: Lets understand the basics. Bank reconciliation statement is a statement which reconcile the balance…

Q: 3. Match each term related to closing entries with its description. 1. Closing entries 2. Permanent…

A: INTRODUCTION: Revenue is the amount of money gained by a company through selling its products or…

Q: Valuation Methods Prelim Drill 2 Earning Before Interest Tax and Depreciation 1. Kabebe Inc. earned…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: t amount of provision should be provided in relation to guarantee?* a. 2,000,000 b.…

A: INTRODUCTION Provisions are funds set aside by a business to cover specific anticipated future…

Q: Data for the following subsidiaries of Timmons Company which are operated as investment centers are…

A: The controllable margin is calculated as difference between contribution margin and Controllable…

Q: NOVA Industries prepared the following financial information as of December 31, 2022.…

A: Retained Earnings The earnings remain after making dividend payments, direct and indirect expenses,…

Q: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a…

A: SHEDULE OF COST OF GOODS MANUFACTURED Schedule of Cost of Goods Manufacturing States the total Cost…

Q: Identify the likely advantage of extending credit to customers. A) Fewer expenses. B) Reduced…

A: You have asked three different questions. These questions are not interlinked. As per guidelines we…

Q: Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict…

A: High-low method is one of the methods to separate the variable cost and fixed cost from the mixed…

Q: Use the following data to compute total factory overhead costs for the month: Sales commissions $…

A: Formula used: Total factory overhead costs=Indirect materials+Factory utilities+Indirect…

Q: At the end of 20X6, Home Ltd. reported the following in shareholders' equity: Common shares, no par…

A: The company pays a dividend to the shareholders, the dividend is the distribution of profit between…

Q: Instructions On the basis of this information, answer the following questions. Show any necessary…

A: According to accounting discontinued operation is a company's core business or product line that…

Q: 90) Inventory records for Dunbar Incorporated revealed the following: Date Transaction Apr. 1…

A: Lets understand the basics. In weighted average basis of inventory, cost per is calculated by…

Q: A firm has a return on equity of 18 percent. The total asset turnover is 1.6 and the profit margin…

A: Your take-home pay, sometimes referred to as net income, is the amount of money that remains in your…

Q: Manufacturing Income Statement, Statement of Cost of Goods Manufactured Several items are omitted…

A: Cost of goods manufactured is the cost incurred for producing a product.It is calculated as follows;…

Q: 126) Using a perpetual inventory system, the sale of inventory on account is recorded with a: B)…

A: Journal Entry :— It is an act of recording transaction in books of account when transaction…

Q: During 2020, Crane Company started a construction job with a contract price of $1,590,000. The job…

A: Percentage of Completion Method: The ongoing recognition of income and costs associated with…

Q: 28 Part 1 of 2 eBook Print References Mc Required information Problem 2-5A Analyze the impact of…

A: Journal entries are being termed as initial step in accounting cycle process. Under this, atleast…

Q: You work as a freelance accounting professional and have been recently engaged by the auditors of…

A: Honor code - “Since you have posted a question with multiple sub-parts, we will provide the solution…

Q: Complete the following table with the missing values. NOTE: Enter numbers rounded to two decimals…

A: MARGIN OF SAFETY Margin of Safety is the Difference Between Actual Sales & Break-Even Point.…

Q: Problem 15-20 1B. Can the calculation for alocation 2 be explained

A: So reciprocal methods are methods that are used to allocate service department cost to the other…

Q: Prepare the cash flows from operating activities section of the statement of cash flows for Parnell…

A: The cash flow statement is either made on the basis of the direct and indirect method by these…

Q: A new store manager has been provided with performance measures for his evaluation. As he reviews…

A: There are many types of cost incurred during manufacturing process. Such as direct cost ,…

Q: variable cost per unit

A: The variable cost per unit is the amount of labor, materials, and other resources required to…

Q: mounts in thousands) sh and cash equivalents ort-term investments counts receivable, less allowance…

A: INTRODUCTION Current ratio-The ability of a corporation to pay its current, or short-term,…

Q: Required information [The following information applies to the questions displayed below.] Martinez…

A: The manufacturing overhead comprises fixed and variable manufacturing overhead. The variable…

Question

5.
On February 1 of Year 1, Karlla Company received $100,000 cash from a one-year bank
loan. The interest rate on the loan is 8%. No payments are due on the loan until January
31 of Year 2. Prepare the ADJUSTING journal entry necessary on December 31 with
respect to this loan.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 8.5%. Each year on December 31, the company pays down the principal balance by $80,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
Sub-Cinema Inc. borrowed $10,000 on Jan. 1 and will repay the loan with 12 equal payments made at the end of the month for 12 months. The interest rate is 12% annually. If the monthly payments are $888.49, what is the journal entry to record the cash received on Jan. 1 and the first payment made on Jan. 31?
Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.
Accrued Interest On May 1, the Garnett Corporation wanted to purchase a $200,000 piece of equipment, but Garnett was only able to furnish $75,000 of its own cash to purchase the equipment. Garnett borrowed the remainder of the $200,000 from the Peoples National Bank on a 3-year, 4% note. Required: If the company keeps its records on a calendar year, what adjusting entry should Garnett make on December 31?
Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in three months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on February 24, and the entry for payment of the short-term note and final interest payment on April 24. Round to the nearest cent if required.
McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
Cost of Bank Loan On March 1, Minnerly Motors obtains a business loan from a local bank. The loan is a 25,000 interest-only loan with a nominal rate of 11%. Interest is calculated on a simple interest basis with a 365-day year. What is Minnerlys interest charge for the first month (assuming 31 days in the month)?
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
A company collects an honored note with a maturity date of 24 months from establishment, a 10% interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of the honored note at maturity date? A. Interest Revenue, Interest Expense, Cash B. Interest Receivable, Cash, Notes Receivable C. Interest Revenue, Interest Receivable, Cash, Notes Receivable D. Notes Receivable, Interest Revenue, Cash, Interest Expense
Everglades Consultants takes out a loan in the amount of $375,000 on April 1. The terms of the loan include a repayment of principal in eight, equal installments, paid annually from the April 1 date. The annual interest rate on the loan is 5%, recognized on December 31. (Round answers to the nearest cent, if needed.) A. Compute the interest recognized as of December 31 in year 1. B. Compute the principal due in year 1.
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.
Mohammed LLC is a growing consulting firm. The following transactions take place during the current year. A. On June 10, Mohammed borrows $270,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in four months from June 10, and annual interest rate of 5%. B. On July 9, Mohammed borrows an additional $100,000 with payment due in four months from July 9, and an annual interest rate of 12%. C. Mohammed pays their accounts in full on October 10 for the June 10 loan, and on November 9 for the July 9 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Mohammed.