Question

4

The unadjusted trial balance of the Manufacturing Equitable at December 31, 2018, the end of its fiscal year, included the following account balances. Manufacturing's 2018 financial statements were issued on April 1, 2019 Accounts receivable Accounts payable Bank notes payable Mortgage note payable $ 103,000 41,000 658,000 1,345,000 Other information: a. The bank notes, issued August 1, 2018, are due on July 31, 2019, and pay interest at a rate of 12%, payable at maturity. b. The mortgage note is due on March 1, 2019. Interest at 11% has been paid up to December 31 (assu realistic rate). Manufacturing intended at December 31, 2018, to refinance the note on its due date with a new 10- year mortgage note. In fact, on March 1, Manufacturing paid $370,000 in cash on the principal balance and refinanced the remaining $975,000. c. Included in the accounts receivable balance at December 31, 2018, were two subsidiary accounts that had been overpaid and had credit balances totaling $16,700. The accounts were of two major customers who were expected to order more merchandise from Manufacturing and apply the overpayments to those future purchases. d. On November 1, 2018, Manufacturing rented a portion of its factory to a tenant for $34,200 per year, payable in advance. The payment for the 12 months ended October 31, 2019, was received as required and was credited to rent revenue.

Answer 1

S.no	General Journal	Debit	Credit
a	Interest expense [(12% x 658,000) x 5/12]	32,900
	Interest Payable		32,900
b	No adjusting entry is required
c	Accounts receivable	16,700
	Advance from customers		16,700
d	Rent revenue	28,500
	Unearned rent revenue		28,500
	34200*10/12

Req 2
	Current liabilities:
	Accounts payable	41,000
	Notes payable	658,000
	Current portion of long-term debt	370,000
	Inerest payable	32,900
	Advance from customers	16,700
	Unearned rent revenue	28,500
	Total current liabilities	1,147,100
	Long-term liabilities:
	Mortgage note payable	975,000