Information: On June 15, 2022, PPI took out a special short-term note to finance the purchase...
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Information: On June 15, 2022, PPI took out a special short-term note to finance the purchase of additional inventory needed for a large contract with a new client. The new, non-interest bearing loan was for $730,000 and must be repaid within 7 months of issuance. After the loan paperwork was signed, the bank transferred $678,900 to PPI and the company was able to start purchasing the needed inventory. While the purchase of inventory was properly recorded, no journal entries have yet been made for the note. PPI's management would like to know the effect of your adjustment on the following ratios: . Current Ratio . Times Interest Earned (Income before Interest and Taxes / Interest Expense) Assignment: Calculations 1. Make the appropriate journal entries, if any, to account for the new note (including any necessary changes to income tax expense). 2. Make any necessary changes to the financial statements. Critical Thinking 3. Calculate each of the required ratios using the original values (before any changes) and the updated values (after your changes). Information: On June 15, 2022, PPI took out a special short-term note to finance the purchase of additional inventory needed for a large contract with a new client. The new, non-interest bearing loan was for $730,000 and must be repaid within 7 months of issuance. After the loan paperwork was signed, the bank transferred $678,900 to PPI and the company was able to start purchasing the needed inventory. While the purchase of inventory was properly recorded, no journal entries have yet been made for the note. PPI's management would like to know the effect of your adjustment on the following ratios: . Current Ratio . Times Interest Earned (Income before Interest and Taxes / Interest Expense) Assignment: Calculations 1. Make the appropriate journal entries, if any, to account for the new note (including any necessary changes to income tax expense). 2. Make any necessary changes to the financial statements. Critical Thinking 3. Calculate each of the required ratios using the original values (before any changes) and the updated values (after your changes).
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Answer rating: 100% (QA)
1 Journal Entries Date June 15 2022 Debit Cash 678900 Credit Notes Payable 730000 No adjustment is r... View the full answer
Related Book For
South Western Federal Taxation 2017 Comprehensive
ISBN: 9781305874169
40th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young
Posted Date:
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