Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2.10E
• LO2–4, LO2–5
The Eldorado Corporation’s controller prepares adjusting entries only at the end of the fiscal year. The following adjusting entries were prepared on December 31, 2018:
| Debit | Credit | |
| Interest expense | 7,200 | |
| Interest payable | 7,200 | |
| Rent expense | 35,000 | |
| Prepaid rent | 35,000 | |
| Interest receivable | 500 | |
| Interest revenue | 500 |
Additional information:
1. The company borrowed $120,000 on March 31, 2018. Principal and interest are due on March 31, 2019. This note is the company’s only interest-bearing debt.
2. Rent for the year on the company’s office space is $60,000. The rent is paid in advance.
3. On October 31, 2018, Eldorado lent money to a customer. The customer signed a note with principal and interest at 6% due in one year.
Required:
Determine the following:
1. What is the interest rate on the company’s note payable?
2. The 2018 rent payment was made at the beginning of which month?
3. How much did Eldorado lend its customer on October 31?
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PA5.
LO 8.5Inner Resources Company started its business on April 1, 2019. The following transactions occurred during the month of April. Prepare the journal entries in the journal on Page 1.
The owners invested $8,500 from their personal account to the business account.
Paid rent $650 with check #101.
Initiated a petty cash fund $550 check #102.
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Petty cash reimbursement office supplies $200, Maintenance Expense $140, Miscellaneous Expense $65. Cash on Hand $93. Check #106.
Increased Petty Cash by $100, check #107.
Required information
Exercise 5-19 (Algo) Prepaid expenses—insurance LO 10
Skip to question
[The following information applies to the questions displayed below.]
A company makes the payment of a one-year insurance premium of $4,440 on March 1, 2019.
Exercise 5-19 (Algo) Part e
e. Accounting for prepaid expenses achieves a better matching of revenues and expenses and yields a more meaningful measure of net income.
true or false
Chapter 2 Solutions
Intermediate Accounting
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