Lino Corporation's liability account balances at December 31, 1993, included the following: 

Note payable to bank $800,000 

Liability under finance lease 280,000 

Deferred income taxes 100,000 

1. The note payable, dated October 1, 1993, bears interest at an annual rate of 10% payable semiannually on April 1 and October 1. Principal payments are due annually on October 1 in four equal installments. 

2. The finance lease is for a 10-year period beginning January 1, 1993. Equal annual payments of $100,000 are due on December 31 of each year. The 16% interest rate implicit in the lease is known by Lino. At December 31, 1993, the present value of the four remaining lease payments discounted at 16% was $280,000. The following are selected present value factors for a discount rate of 16%: 

Period   Annuity Due   Ordinary Annuity 

3          2.605               2.246 

4          3.246              2.798 

3. Deferred Income taxes are provided in recognition of timing differences between financial statement and income tax reporting of depreciation. For the year ended December 31, 1993. depreciation per tax return exceeded book depreciation by $50,000. Lino's income tax rate for 1993 was 30%. 

4. On July 1, 1993, Lino issued $1,000,000 face amount of 10-year, 10% bonds for $750,000, to yield 15%. Interest is payable annually on July 1. Bond discount is amortized by the interest method. 

Complete Lino's balance sheet at December 31, 1993 using the information above. Enter the appropriate amounts in the designated cells below. Enter all amounts as positive values.

Transcribed Image Text:

Account 1. Note payable 2. Liability under finance lease 3. Deferred income taxes 4. Net bonds payable Amount 123 123 123 123 Account 1. Note payable 2. Liability under finance lease 3. Deferred income taxes 4. Net bonds payable Amount 123 123 123 123

Answer rating: 100% (QA)

Working Notes 1 10 notes Payable to Bank Notes Payable December 31 800000 Less Installment Paid 2000... View the full answer