EBK ACCOUNTING PRINCIPLES
13th Edition
ISBN: 9781119411017
Author: Weygandt
Publisher: WILEY
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LARA Company secured a bank loan of $90,000, on 1/4/2020. In return, it signed a
10 month, 6%, note payable. LARA Co. closes its accounts annually, on December
31 of every year. The loan and total interest are to be paid to the bank at the end
of the loan term.
Required: the adjusting entry on December 31, 2020, will show a credit to interest
payable for...
The following information relates to the Crane Company at the end of 2020. The accounting period is the calendar year.
1.
Employees are paid every Friday for the five-day week ending on that day. Salaries amount to $3,700 per week. The accounting period ends on a Tuesday.
2.
A note for $6,200 was received from a customer in a sales transaction on April 1, 2020. The note matures in one year and bears 6% interest.
3.
On September 1, 2020, Crane borrowed $12,300 cash by signing a note payable due in one year at 8% interest.
Using the information given above, prepare the necessary adjusting entries at December 31, 2020.
Jenkins Inc. had the following transactions.
Sep 1 Loaned $20,000 to an employee, who signed a 9-month, 9% note. Interest and principal
will all be due on May 31.
Dec. 31- Accrued interest on the note. (Round to the nearest whole dollar amount.)
May 31 Received the interest on the note's maturity date.
PE
May 31
amount.)
Required:
Prepare the required journal entries. Use the MSWord link for the table to write your journal
entries. After you have written the journal entries on the table in the MSWord document provided,
Received the principal on the note's maturity date. (Round to the nearest whole dollar
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- 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.arrow_forwardOn 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.arrow_forwardWhole 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.arrow_forward
- Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.arrow_forwardJain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?arrow_forwardMcMasters 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.arrow_forward
- Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts receivable balance of $844,260, and an ending accounts receivable balance of $604,930. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Starlight Enterprises if the industry average is 1.5 times and the number of days sales ratio is 175 days?arrow_forwardA 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 Expensearrow_forwardTangent Company borrowed $100,000 from the bank signing an 8%, 6-month note on September 1. Principal and interest are payable to the bank on March 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on November 30, would be: A) debit Interest Expense, $8,000; credit Interest Payable, $8,000. B) debit Interest Expense, $667; credit Interest Payable, $667. C) No adjusting entry is needed on November 30. D) debit Interest Expense, $2,667; credit Interest Payable, $2,667.arrow_forward
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