Question

Please correct the incorrect answers

Rainey Enterprises loaned $45,000 to Small Co. on June 1, 2018, for one year at 7 percent Interest. Required Show the effects of the following transactions in a horizontal statements. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). For any element not affected by the event, leave the cell blank. (Not every cell will require entry. Do not round Intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign.) (1) The loan to Small Co. (2) The adjusting entry at December 31, 2018. (3) The adjusting entry and collection of the note on June 1, 2019. Answer is not complete. Date RAINEY ENTERPRISES Horizontal Statements Model Equity Interest Revenue Receivable Earnings Assets Notes Receivable 45,000 Income Statement - Cash + 1. (45,000 + 1,838 6/1/18 12/31/18 6/1/19 6/1/19 6/1/19 1,838 1,313 1,838 1,313 Statement of Net Cash Flow Income 45,000 ⓇIA 1,838 1,3131,313 OA % 1,838 X OA 45,000 1,313 X 1,838 X 4 5,000 (1,838) X + + (45,000) +

Answer 1

Date	Account Title and Explanation	Debit	Credit
01-Jun-18	Note Receivable	$45,000
	Cash		$45,000
	Record loan to Small Co.
Date	Account Title and Explanation	Debit	Credit
31-Dec-18	Interest Receivable	$1,837.5
	Interest Income		$1,837.5
	Record interest earned but not yet received on loan to Small Co.
$ 45,000 loan x 7% interest x 7 months outstanding / 12 months = $1,837.5
Date	Account Title and Explanation	Debit	Credit
01-Jun-19	Cash	$48,150
	Note Receivable		$45,000
	Interest Receivable		$1,837.5
	Interest Income		$1,312.5
	Record payment of loan and related interest on loan to Small Co.
$ 45,000 loan x 7% interest x 5 months outstanding / 12 months = $ 1312.5

Horizontal Statement Model

	Assets						Equity	Income Statement					Statement of Cash Flow
Date	Cash	+	Note Receivable	+	Interest Receivable	=	Retained Earnings	Revenue	-	Expenses	=	Net Income
06-01-18	($45,000)	+	$45,000	+	$                        -	=	$                       -	$                  -	-	$                  -	=	0	$    (45,000)	IA
12-31-2018	$             -	+	$                    -	+	$              1,837.50	=	$             1,837.50	$       1,837.50	-	$                  -	=	$ 1,837.50	$             -	NA
06-01-19	$                    -	+	$                            -	+	$ 1,312.50	=	$             1,312.50	$       1,312.50	-	$                  -	=	$ 1,312.50	$             -	NA
06-01-19	$ 48,150.00	+	$          (45,000)	+	$                 (3,150)	=	$                                 -	$                          -	-	$                          -	=	$                 -	$ 45,000.00	IA
06-01-19	$                    -	+	$                            -	+	$                                  -	=	$                                 -	$                          -	-	$                          -	=	$                 -	$   3,150.00	OA