Question 3 Becon Company started its trading business on 1 January. During each of the past three years ended on 31 December 2019, 2020, 2021, the debts were written off on the dates stated as follow: 17 February 2019 19 October 2019 11 March 2020 12 August 2020 03 March 2021 19 September 2021 Kenneth Batoh Y. Yap Pecon Sai Hoh Ismail RM320 RM190 RM220 RM430 RM540 RM390 Additional Information: (i) On 31 December 2019, the balance of accounts receivable was RM9,800. It was decided to make an allowance for doubtful debts of RM1,500. (ii) On 31 December 2020, there had been a total of accounts receivable remaining of RM8,800. It was decided to make an allowance for doubtful debts of RM1,750. (iii) On 31 December 2021, there had been a total of accounts receivable remaining of 9,200. It was decided to make an allowance for doubtful debts of RM1,650. Required: (a) Prepare the Bad Debts Accounts and Allowance for Doubtful Debts Account for 2019, 2020 and 2021. (b) Prepare the Income Statement (extract) for each of the years ended 31 December 2019, 2020 and 2021 (c) Prepare the Balance Sheet (extract) as at 31 December 2019, 2020, and 2021.

Question 3 Becon Company started its trading business on 1 January. During each of the past three years ended on 31 December 2019, 2020, 2021, the debts were written off on the dates stated as follow: 17 February 2019 19 October 2019 11 March 2020 12 August 2020 03 March 2021 19 September 2021 Kenneth Batoh Y. Yap Pecon Sai Hoh Ismail RM320 RM190 RM220 RM430 RM540 RM390 Additional Information: (i) On 31 December 2019, the balance of accounts receivable was RM9,800. It was decided to make an allowance for doubtful debts of RM1,500. (ii) On 31 December 2020, there had been a total of accounts receivable remaining of RM8,800. It was decided to make an allowance for doubtful debts of RM1,750. (iii) On 31 December 2021, there had been a total of accounts receivable remaining of 9,200. It was decided to make an allowance for doubtful debts of RM1,650. Required: (a) Prepare the Bad Debts Accounts and Allowance for Doubtful Debts Account for 2019, 2020 and 2021. (b) Prepare the Income Statement (extract) for each of the years ended 31 December 2019, 2020 and 2021 (c) Prepare the Balance Sheet (extract) as at 31 December 2019, 2020, and 2021.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 75BPSB: Note Payable and Accrued Interest Ellsworth Enterprises borrowed $425,000 on an 8%, interest-bearing...

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Note Payable and Accrued Interest Ellsworth Enterprises borrowed $425,000 on an 8%, interest-bearing note on September 30, 2020. Ellsworth ends its fiscal year on December 31. The note was paid with interest on March 31, 2021. Required: 1. Prepare the entry for this note on September 30, 2020. 2. Prepare the adjusting entry for this note on December 31, 2020. 3. Indicate how the note and the accrued interest would appear on the balance sheet at December 31, 2020. 4. Prepare the entry to record the repayment of the note on March 31, 2021.
Spreadsheet from Trial Balance Heinz Companys post closing trial balance as of December 31, 2018, and the adjusted trial balance as of December 31, 2019, are shown here: A review of the accounting records reveals the following additional information: a. Bomb payable with a face value, book value, and market value of 14,000 were retired on June 30, 2019. b. Bonds payable with a face value of 8,000 were issued at 90.25 on August 1, 2019. They mature on August 1, 2024. The company uses the straight-line method to amortize the bond discount. c. The company sold a building that had an original cost of 8,000 and a book value of 4,800. The company received 2,200 in cash for the building and recorded a loss of 2,600. d. Equipment with a cost of 4,000 and a book value of 1,400 was exchanged for an acre of land valued at 2,700. No cash was exchanged. e. Long-term investments in bonds being held to maturity with a cost of 1,000 were sold for 800. f. Sixty-five shares of common stock were exchanged for a patent. The common stock was selling for 20 per share at the time of the exchange. Required: Prepare a spreadsheet to support a statement of cash flows for 2019.
(Appendix 21.1) Comprehensive The following are Adair Companys December 31, 2018, post-closing trial balance and the December 31, 2019, adjusted trial balance: A review of the accounting records reveals the following additional information for 2019: Investments in bonds to be held to maturity were purchased at year-end for 8,600. A building was purchased for 28,000. A note payable was issued for 9,000. Common stock was issued for 14,500. Dividends of 6,500 were declared and paid. Required: 1. Using the direct method for operating cash flows, prepare a spreadsheet to support the 2019 statement of cash flows for Adair. 2. Prepare the statement of cash flows. (A separate schedule reconciling net income to cash provided by operating activities is not necessary.)
Dallas Company loaned to Ewing Company on December 1, 2019. Ewing will pay Dallas $720 of interest ($60 per month) on November 30, 2020. Dallass adjusting entry at December 31, 2019, is: a. Interest Expense ........... 60 c. Interest Receivable ....... 60 Cash ......................... 60 Interest Income ........ 60 b. Cash ............................ 60 d. No adjusting entry is required. Interest Income ........ 60
Cornerstone Exercise 9-26 Debt Issued at Par On January 1, 2019, Brock & Co. issued S600,000 of bonds payable at par. The bonds have a 9% stated rate, pay interest on March 31, June 30, September 30, and December 31, and mature on December 31, 2019, Required: Prepare the journal entries to record the interest payment on June 30, 2019. Use the following information for Cornerstone Exercises 9-27 and 9-28: On January 1, 2020, Drew Company issued S350,000, 5-year bonds for $320,000. The stated rate of interest was 7% and interest is paid annually on December 31.
Problem Reporting Long-Term Debt Fridley Manufacturings accounting records reveal the following account balances after adjusting entries are made on December 31, 2020. Required: Prepare the current liabilities and long-term debt portions of Fridleys balance sheet at December 31, 2020. Provide a separate line item for each issue (do not combine separate bonds or notes payable), but some items may need to be split into more than one item. Accounts payable $ 62,500 Bonds payable (9.4%, due in 2027) 800,000 Lease liability* 41,500 Bonds payable (8.7%, due in 2023) 50,000 Deferred tax liability* 133.400 Discount on bonds payable (94%, due in 2027) 12,600 Income taxes payable 26,900 * Long term liability Interest payable $ 38,700 Installment note payable (8%, equal installments due 2021 to 2024) 120,000 Notes payable (7.8%, due in 2025) 400,000 Premium on notes payable (7.8%, due in 2025) 6, [00 Note payable, 4% $50,000 face amount. due in 2026 (net of discount) 31,900
Trade Note Transactions Adjusto Corporation (which is on a December 31 fiscal year-end) engaged in the following transactions during 2019 and 2020: Required: Prepare journal entries to record the preceding transactions on Adjustos books, including the adjusting entries at the end of 2019. Assume a 360-day year.
Financial Statement Violations of U.S. GAAP The following are the financial statements issued by Allen Corporation for its fiscal year ended October 31, 2019: Notes to Financial Statements: 1. Long-Term Lease. Under the terms of a 5-year, noncancelable lease for a building, Allen is obligated to make annual rental payments of 40,000 in each of the next 4 fiscal years. 2. Pension Plan. Substai1tially all employees are covered by Allens defined benefit pension plan. Pension expense is equal to the total of pension benefits accrued and paid to retired employees during the year. Because it is a defined benefit plan that is paid every year, no pension liability exists. 3. Patent. The patent had an estimated remaining life of 10 years at the time of purchase. Allens patent was purchased from Apex Corporation on January 1, 2019, for 250,000. 4. Deferred Income Tax Payable. The entire balai1ce in the Deferred Income Tax Payable account arose from tax-exempt municipal bonds that were held during the previous fiscal year, giving rise to a difference between taxable income and reported net earnings for the fiscal year ended October 31, 2019. The deferred liability amount was calculated on the basis of past tax rates. 5. Warrants. On January 1, 2018, one common stock warrant was issued to shareholders of record for each common share owned. An additional share of common stock is to be issued upon exercise of 10 stock warrants and receipt of an amount equal to par value. For the 6 months ended October 31, 2019, the average market value for Allens common stock was 5 per share and no warrants had yet been exercised. 6. Contingent Liability. On October 31, 2019, Allen was contingently liable for product warranties in an amount estimated to aggregate 75,000. Required: Next Level Review the preceding financial state1nents and related notes. Identify any inclusions or exclusions from them that would be in violation of GAAP, and indicate corrective action to be taken. Do not comment as to format or style. Respond in the following order: 1. Balance sheet 2. Notes 3. Income statement 4. Statement of retained earnings 5. General
Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.
Interest-Bearing and Non-Interest-Bearing Notes On December 11, 2019, Hooper Inc. made a credit sale to Marshall Company and required Marshall to sign a 12,000,60-day note. Required: Prepare the journal entries necessary to record the receipt of the note by Hooper, the accrual of interest on December 31, 2019, and the customers repayment on February 9, 2020, assuming: 1. Interest of 12% was in addition to the face value of the note. 2. The note was issued as a 12,000 non-interest-bearing note with a present value of 11,765. The implicit interest rate on the note receivable was 12%. Assume a 360-day year. (Round to the nearest dollar.)
Balance Sheet Baggett Companys balance sheet accounts and amounts as of December 31, 2019, are shown in random order as follows: Required: 1. Prepare a December 31, 2019, balance sheet for Baggett. 2. Compute the debt to-assets ratio.
Short-Term Debt Expected to Be Refinanced On December 31, 2019, Excello Electric Company had 1 million of short-term notes payable due February 7, 2020. Excello expected to refinance these notes on a long-term basis. On January 15, 2020, the company issued bonds with a face value of 900,000 for 882,000. On January 22, 2020, the proceeds from the bond issue plus additional cash held by Excello on December 31, 2019, were used to liquidate the 1 million of short-term notes. The December 31, 2019, balance sheet is issued on February 12, 2020. Required: Prepare a partial balance sheet as of December 31, 2019, showing how the 1 million of short-term notes payable should be disclosed. Include an appropriate footnote for proper disclosure.