P10-2B Skate City Corporation sells skateboard products and also operates an indoor skating facility. During the...
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P10-2B Skate City Corporation sells skateboard products and also operates an indoor skating facility. During the last part of 2014, Skate City had the following transactions related to notes payable. Aug. 1 Issued a $6,000 note to Wheeler to purchase inventory. The 3-month note payable bears interest of 9% and is due November 1. Recorded accrued interest for the Wheeler note. Aug. 31 Sept. 1 Issued a $15,000, 8%, 6-month note to Commerce Bank to finance the purchase of a new ramp for advanced boarders. The note is due March 1. Recorded accrued interest for the Wheeler note and the Commerce Bank note. Sept. 30 Oct. 1 Issued a $40,000 note and paid $10,000 cash to repair and improve its building. This note bears interest of 8% and matures in 12 months. Oct. 31. Recorded accrued interest for the Wheeler note, the Commerce Bank note, and the improvement note. Nov. 1 Paid principal and interest on the Wheeler note. Nov. 30 Recorded accrued interest for the Commerce Bank note and the improvement note. Dec. 31 Recorded accrued interest for the Commerce Bank note and the improvement note. Instructions (a) Prepare journal entries for the transactions noted above. (b) Post the above entries to the Notes Payable, Interest Payable, and Interest Expense accounts. (Use T-accounts.) (e) Show the balance sheet presentation of notes payable and interest payable at December 31. (d) How much interest expense relating to notes payable did Skate City incur during the year? P10-3B The following section is taken from Lyons Corp.'s balance sheet at December 31, 2013. Current liabilities $ 96,000 Interest payable Long-term liabilities Bonds payable (8%, due January 1, 2018) 1,200,000 Interest is payable annually on January 1. The bonds are callable on any annual interest date. Instructions (a) Journalize the payment of the bond interest on January 1, 2014. (b) Assume that on January 1, 2014, after paying interest, Lyons Corp. calls bonds having a face value of $300,000. The call price is 108. Record the redemption of the bonds. (c) Prepare the adjusting entry on December 31, 2014, to accrue the interest on the remaining bonds. P10-4B On April 1, 2013, CMV Corp. issued $600,000, 5%, 5-year bonds at face value. The bonds were dated April 1, 2013, and pay interest annually on April 1. Financial state- ments are prepared annually on December 31. Instructions (a) Prepare the journal entry to record the issuance of the bonds. (b) Prepare the adjusting entry to record the accrual of interest on December 31, 2013. (c) Show the balance sheet presentation of bonds payable and bond interest payable on December 31, 2013. (d) Prepare the journal entry to record the payment of interest on April 1, 2014. (e) Prepare the adjusting entry to record the accrual of interest on December 31, 2014. P10-2B Skate City Corporation sells skateboard products and also operates an indoor skating facility. During the last part of 2014, Skate City had the following transactions related to notes payable. Aug. 1 Issued a $6,000 note to Wheeler to purchase inventory. The 3-month note payable bears interest of 9% and is due November 1. Recorded accrued interest for the Wheeler note. Aug. 31 Sept. 1 Issued a $15,000, 8%, 6-month note to Commerce Bank to finance the purchase of a new ramp for advanced boarders. The note is due March 1. Recorded accrued interest for the Wheeler note and the Commerce Bank note. Sept. 30 Oct. 1 Issued a $40,000 note and paid $10,000 cash to repair and improve its building. This note bears interest of 8% and matures in 12 months. Oct. 31. Recorded accrued interest for the Wheeler note, the Commerce Bank note, and the improvement note. Nov. 1 Paid principal and interest on the Wheeler note. Nov. 30 Recorded accrued interest for the Commerce Bank note and the improvement note. Dec. 31 Recorded accrued interest for the Commerce Bank note and the improvement note. Instructions (a) Prepare journal entries for the transactions noted above. (b) Post the above entries to the Notes Payable, Interest Payable, and Interest Expense accounts. (Use T-accounts.) (e) Show the balance sheet presentation of notes payable and interest payable at December 31. (d) How much interest expense relating to notes payable did Skate City incur during the year? P10-3B The following section is taken from Lyons Corp.'s balance sheet at December 31, 2013. Current liabilities $ 96,000 Interest payable Long-term liabilities Bonds payable (8%, due January 1, 2018) 1,200,000 Interest is payable annually on January 1. The bonds are callable on any annual interest date. Instructions (a) Journalize the payment of the bond interest on January 1, 2014. (b) Assume that on January 1, 2014, after paying interest, Lyons Corp. calls bonds having a face value of $300,000. The call price is 108. Record the redemption of the bonds. (c) Prepare the adjusting entry on December 31, 2014, to accrue the interest on the remaining bonds. P10-4B On April 1, 2013, CMV Corp. issued $600,000, 5%, 5-year bonds at face value. The bonds were dated April 1, 2013, and pay interest annually on April 1. Financial state- ments are prepared annually on December 31. Instructions (a) Prepare the journal entry to record the issuance of the bonds. (b) Prepare the adjusting entry to record the accrual of interest on December 31, 2013. (c) Show the balance sheet presentation of bonds payable and bond interest payable on December 31, 2013. (d) Prepare the journal entry to record the payment of interest on April 1, 2014. (e) Prepare the adjusting entry to record the accrual of interest on December 31, 2014.
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General Journal Date Particular Debit Credit Aug01 Inventory Ac Dr 6000 To Note Payable 6000 Being Issued note for Inventory Aug31 Interest Exp Ac Dr 45 To Interest Payable 45 Being Interet Recorded f... View the full answer
Related Book For
Accounting Tools for Business Decision Making
ISBN: 978-1118128169
5th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
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