The unadjusted trail balance of Beirut Company at December 31, 2018, included the following account balances. Beiruts
Question:
The unadjusted trail balance of Beirut Company at December 31, 2018, included the following account balances. Beirut’s 2018 finance statements were issued on March 31, 2019.
Accounts receivable | $ 114,250 |
Accounts payable | 53,600 |
Notes payable | 670,000 |
Mortgage payable | 1,270,000 |
Other information:
a. The notes payable were issued August 1, 2018, and are due on July 31, 2019. The interest rate is 12% payable at maturity.
b. The mortgage payable is due on March 1, 2019. Interest at 11% has been paid up to December 31. Beirut intended to refinance the mortgage on its due date with a new 10-year mortgage. In fact, on March 1, Beirut paid $263,000 in cash on the principal balance and refinanced the remaining $1,007,000.
c. Included in the accounts receivable at December 31, 2018 were two accounts that had been overpaid and had credit balances total $19,650. The overpayments will be applied to future purchases. Hint: these need be reclassified as customer advances.
d. On November 1, 2018, Beirut rented a portion of its factory to a tenant for $32,400 that was received in advance. The amount was incorrectly credited to Rent Revenue.
Required:
1) Prepare any necessary adjusting/correcting entries related to the above items.
2) Prepare the current and long-term liability sections of the December 31, 2018 balance sheet.
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas