Ventura Company adjusts its accounts monthly and closes its accounts on December 31. On October 31, 2011,
Question:
Ventura Company adjusts its accounts monthly and closes its accounts on December 31. On October 31, 2011, Ventura Company signed a note payable and borrowed $120,000 from a bank for a period of six months at an annual interest rate of 9 percent.
a. How much is the total interest expense over the life of the note? How much is the monthly interest expense? (Assume equal amounts of interest expense each month.)
b. In the company’s annual balance sheet at December 31, 2011, what is the amount of the liability to the bank?
c. Prepare the journal entry to record issuance of the note payable on October 31, 2011.
d. Prepare the adjusting entry to accrue interest on the note at December 31, 2011.
e. Assume the company prepared a balance sheet at March 31, 2012. State the amount of the liability to the bank at this date.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a The total interest expense over the life of the note is 54...View the full answer
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
