Zambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2011:

Selected balance sheet information:

Additional information:
1. On March 31, 2010, Zambrano lent a customer $50,000. Interest at 8% is payable annually on each March 31. Principal is due in 2014.
2. The annual insurance payment is made in advance on April 30.
3. On October 31, 2011, Zambrano borrowed $100,000 from a local bank. Principal and interest at 6% are due on October 31, 2012.
4. Annual rent on the company's facilities is paid in advance on June 30.

1. Prepare an accrual basis income statement for 2011 (ignore income taxes).
2. Determine the following balance sheet amounts on December 31, 2011:
a. Prepaid insurance
b. Prepaid rent
c. Interest receivable
d. Interest payable

  • CreatedJune 24, 2013
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