1.
Concept Introduction: Deferred expenses are advance payments for future expenses. When a business prepays an expense, it can debit an asset account and defer the recognition of the expense. Deferring an expense creates an asset, thus, the account is debited to recognize this prepayment.
The interest expense accrued at December 31, 2024.
2.
Concept Introduction: At the end of the accounting period, adjustments are made to record revenues in the period they are earned and expenses in the period they occur. Adjustment entries also update assets and liabilities. Adjustment entries are also required to present true and fair financial statements.
The
3.
Concept Introduction: At the end of the accounting period, adjustments are made to record revenues in the period they are earned and expenses in the period they occur. Adjustment entries also update assets and liabilities. Adjustment entries are also required to present true and fair financial statements.
The T accounts for passed entries.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 3 Solutions
HORNGREN'S FIN.+MGRL..:MANAG.CHP.-MYLAB
- Arvan Patel is a customer of Banks Hardware Store. For Mr. Patels latest purchase on January 1, 2018, Banks Hardware issues a note with a principal amount of $480,000, 13% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Banks Hardware Store for the following transactions. A. Note issuance B. Subsequent interest entry on December 31, 2018 C. Honored note entry at maturity on December 31, 2019.arrow_forwardAnderson Air is a customer of Handler Cleaning Operations. For Anderson Airs latest purchase on January 1, 2018, Handler Cleaning Operations issues a note with a principal amount of $1,255,000, 6% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Handler Cleaning Operations for the following transactions. A. Entry for note issuance B. Subsequent interest entry on December 31, 2018 C. Honored note entry at maturity on December 31, 2019arrow_forwardNotes Payable and Effective Interest On November 1,2019, Edwin Inc. borrowed cash and signed a 60,000, 1-year note payable. Required: Compute the following items assuming (a) an interest-bearing note at 12%, (b) a non-interest-bearing note discounted at 12%: cash received effective interest rate interest expense for 2019 Prepare the journal entries for Edwin under each case for 2019 and 2020. Next Level Why is the effective rate higher for the non-interest-bearing note?arrow_forward
- Non-Interest-Bearing Notes Payable On November 16, 2019, Clear Glass Company borrowed 20,000 from First American Bank by issuing a 90-day, non-interest-bearing note. The bank discounted this note at 12% and remitted the difference to Clear Glass. Required: 1. Prepare the journal entries of Clear Glass to record the preceding information, the related calendar year-end adjusting entry, and payment of the note at maturity. 2. Show how the preceding items Would be reported on the December 31, 2019, balance sheet. 3. Next Level What is Clear Glass Companys effective interest rate?arrow_forwardACCRUED INTEREST RECEIVABLE The following is a list of outstanding notes receivable as of December 31, 20--: REQUIRED 1. Compute the accrued interest at the end of the year. 2. Prepare the adjusting entry in the general journal.arrow_forwardUse information from EA10. Compute the interest expense due when Barkers honors the note. Show the journal entry to recognize payment of the short-term note on December 4.arrow_forward
- Notes Receivable On September 1, 2016, Dougherty Corp. accepted a six-month, 7%, $45,000 interest-bearing note from Rozelle Company in payment of an account receivable. Doughertys year-end is December 31. Rozelle paid the note and interest on the due date. Required Who is the maker and who is the payee of the note? What is the maturity date of the note? Prepare all necessary journal entries that Dougherty needs to make in connection with this note.arrow_forwardKingbird Corporation issued $460,000, 8%, 20-year bonds on January 1, 2022, for $418,008. This price resulted in an effective- interest rate of 9% on the bonds. Interest is payable annually on January 1. Kingbird uses the effective-interest method to amortize bond premium or discount. (a) Your answer is correct. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Jan. 1, 2022 Account Titles and Explanation Cash Discount on Bonds Payable Bonds Payable Debit 418008 41992 Credit 460000arrow_forwardAccounting for Notes Receivable—Honoured and Dishonoured On November 30, 2018, Tucker Products performed computer programming services for Damascus Inc. in exchange for a five-month, $75,000, 10% note receivable. Damascus Inc. paid Tucker the full amount of interest and principal on April 30, 2019. Tucker has a December 31 year-end. Required: 1. Prepare the necessary entries for Tucker to record the transactions described above. For a compound transaction, if those boxes in which no entry is required, leave the box blank. If required, round amounts to the nearest dollar. 2018, Nov. 30 (Record adjusting entry for bad debt expense estimate) 2018, Dec. 31 (Record accrued interest income) 2019, Apr. 30 (Record collection of note receivable) 2. Prepare the journal entry required if the note is dishonoured on April 30, 2019. For those boxes in which no entry is required,…arrow_forward
- Adjusting journal entry for: On November 1st, 2018, FTS purchased a certificate of deposit from First National Bank for $25,000. The deposit earns interest of 2.0% annually and has a maturity end date of 11/1/2020. Interest earned is received annually on November 1st of each year.arrow_forwardWindsor Company borrowed $49,200 on November 1, 2025, by signing a $49,200, 10%, 3-month note. Prepare Windsor's November 1,2025, entry; the December 31, 2025, annual adjusting entry; and the February 1, 2026, entry. (If no entry is required, select "No Entry for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Creditarrow_forwardJournalize the following, assuming a 360-day year is used for interest calculations: Apr. 30 Issued a $1,080,000, 120-day, 9% note dated April 30 to Misner Co. on account. Aug. 30 Paid Misner Co. the amount owed on the note dated April 30. If an amount box does not require an entry, leave it blank. When required, round your answers to the nearest dollar. Apr. 30 Aug. 30arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337794756/9781337794756_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305654174/9781305654174_smallCoverImage.gif)