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Problem Reporting Long-Term Debt
Fridley Manufacturing’s accounting records reveal the following account balances after
Required:
Prepare the current liabilities and long-term debt portions of Fridley’s 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 |
|
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 |
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Chapter 9 Solutions
Cornerstones of Financial Accounting
- 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.arrow_forwardEstimating Bad Debts Keegan Corporations accounting records disclosed the following information for 2019: Keegan wishes to examine the effect of various alternative had debt estimation policies. Required: 1. Prepare the adjusting entry that would be required under each of the following methods: a. Bad debts are estimated at 3% of net credit sales. b. Bad debts are estimated at 7.5% of gross accounts receivable. c. An aging of accounts receivable indicates that half of the outstanding accounts will incur a 3% loss, a quarter will incur a 6% loss, the remaining quarter will incur a 20% loss. 2. Next Level Discuss the difference between the income statement and balance sheet approaches to estimating bad debts.arrow_forwardShort-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.arrow_forward
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