FINANCIAL AND MANAGERIAL ACCOUNTING
13th Edition
ISBN: 9781337816045
Author: WARREN
Publisher: CENGAGE L
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Textbook Question
Chapter 4, Problem 4.3CP
Financial statements
Assume that you recently accepted a position with Five Star National Bank & Trust as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for $300,000 from West Gate Auto Co., a small corporation. In support of the loan application, Joan Whalen, owner and sole stockholder, submitted a “Statement of Accounts" (
West Gate Auto Co. Statement of Accounts October 31,2016 |
|||
Cash.......................... | 5,000 | ||
Billings Due from Others........ | 40,000 | ||
Supplies (chemicals, etc.)........ | 7,500 | ||
Building....................... | 222,300 | ||
Equipment..................... | 50,000 | ||
Amounts Owed to Others....... | 31,000 | ||
Investment in Business......... | 179,000 | ||
Service Revenue............... | 215,000 | ||
Wages Expense................ | 75,000 | ||
Utilities Expense............... | 10,000 | ||
Rent Expense................... | 8,000 | ||
Insurance Expense.............. | 6,000 | ||
Other Expenses................ | 1,200 | ||
425,000 | 425,000 |
- 1 Explain to Joan Whalen why a set of financial statements (income statement,
retained earnings statement, andbalance sheet ) would be useful to you in evaluating the loan request. - 2 In discussing the "Statement of Accounts with Joan Whalen, you discovered that the accounts had not been adjusted at October 31. Analyze the "Statement of Accounts" and indicate possible
adjusting entries that might be necessary before an accurate set of financial statements could be prepared. - 3 Assuming that an accurate set of financial statements will be submitted by Joan Whalen in a few days, what other considerations or information would you require before making a decision on the loan request?
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Jan. 1
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1,004,720
Premium on Bonds Payable
58,720
Bonds Payable
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Jun. 30
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2,936
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Jul. 1
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2,000,000
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18,349
Premium on Bonds Payable
2,936
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21,285
31
Interest Expense
41,560
Discount on Bonds Payable
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You are an accounting intern working for SpringFit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by SpringFit Corporation. Your first task is to review the previous year’s journal entries, shown as follows:
Journal Entries, Year 1
Journal
Date
Description
Debit
Credit
Jan. 1
Cash
1,004,720
Premium on Bonds Payable
58,720
Bonds Payable
946,000
Jun. 30
Interest Expense
18,349
Premium on Bonds Payable
2,936
Cash
21,285
Jul. 1
Cash
1,921,280
Discount on Bonds Payable
78,720
Bonds Payable
2,000,000
Dec. 31
Interest Expense
18,349
Premium on Bonds Payable
2,936
Cash
21,285
31
Interest Expense
41,560
Discount on Bonds Payable
6,560…
Prepare the necessary journal entries (include journal entry descriptions) for the selected
transactions of Nester Company whose fiscal year end is December 31, You MUST show the
details of any calculations either in parenthesis or as a footnote.
Date
Transaction Description
7/1/20Y5
Accepted a 5-month, 6% note in settlement of a past due customer account, Barns
Company, with a $9,000 balance.
11/1/20Y5
Accepted a promissory note from a Nester Company executive in exchange for
providing the executive with S20,000 to be used for relocation costs. The note
carries interest of 9% and is due in 8 months.
12/1/20Y5
Received the amount due on the note from Barns Company.
12/31/20Y5 Accrued interest on the 8-month note received from the Nester Company
executive.
7/1/20Y6
Received full payment from the Nester Company executive.
Chapter 4 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
Ch. 4 - Why do some accountants prepare an end-of-period...Ch. 4 - Describe the nature of the assets that compose the...Ch. 4 - Prob. 3DQCh. 4 - What types of accounts are referred to as...Ch. 4 - Why are closing entries required at the end of an...Ch. 4 - Prob. 6DQCh. 4 - What is the purpose of the post-closing trial...Ch. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Recent fiscal years for several well-known...
Ch. 4 - Prob. 4.1APECh. 4 - Flow of accounts into financial statements The...Ch. 4 - Retained earnings statement Marcie Davies owns and...Ch. 4 - Prob. 4.2BPECh. 4 - Prob. 4.3APECh. 4 - Prob. 4.3BPECh. 4 - Closing entries After the accounts have been...Ch. 4 - Closing entries After the accounts have been...Ch. 4 - Accounting cycle From the following list of steps...Ch. 4 - Accounting cycle From the following list of steps...Ch. 4 - Prob. 4.6APECh. 4 - Prob. 4.6BPECh. 4 - Flow of accounts into financial statements The...Ch. 4 - Classifying accounts Balances for each of the...Ch. 4 - Financial statements from the end-of-period...Ch. 4 - Prob. 4.4EXCh. 4 - Income statement The following account balances...Ch. 4 - Prob. 4.6EXCh. 4 - Prob. 4.7EXCh. 4 - Prob. 4.8EXCh. 4 - Retained earnings statement; net loss Selected...Ch. 4 - Classifying assets Identify each of the following...Ch. 4 - Balance sheet classification At the balance sheet...Ch. 4 - Prob. 4.12EXCh. 4 - Prob. 4.13EXCh. 4 - Prob. 4.14EXCh. 4 - Closing entries Prior to its closing, Income...Ch. 4 - Prob. 4.16EXCh. 4 - Closing entries with net loss Mira Services Co....Ch. 4 - Identifying permanent accounts Which of the...Ch. 4 - Post-closing trial balance An accountant prepared...Ch. 4 - Steps in the accounting cycle Rearrange the...Ch. 4 - Working capital and current ratio The following...Ch. 4 - Prob. 4.22EXCh. 4 - Appendix 1 Completing an end-of-period spreadsheet...Ch. 4 - Prob. 4.24EXCh. 4 - Prob. 4.25EXCh. 4 - Completing an end-of-period spreadsheet Alert...Ch. 4 - Adjustment data on an end-of-period spreadsheet...Ch. 4 - Completing an end-of-period spreadsheet Alert...Ch. 4 - Financial statements and closing entries Lamp...Ch. 4 - Financial statements and closing entries Finders...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Ledger accounts, adjusting entries, financial...Ch. 4 - Complete accounting cycle For the past several...Ch. 4 - Financial statements and closing entries Last...Ch. 4 - Financial statements and dosing entries The Gorman...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Prob. 4.4BPRCh. 4 - Complete accounting cycle For the past several...Ch. 4 - Comprehensive problem 1 Kelly Pitney began her...Ch. 4 - Continuing Problem The unadjusted trial balance of...Ch. 4 - Prob. 4.1CPCh. 4 - Financial statements The following is an excerpt...Ch. 4 - Financial statements Assume that you recently...
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