Question

Problem 13-4 Various liabilities (LO13-1, 13-2, 13-3, 13-4) 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 Apr 1, 2019 Accounts receivable Accounts payable Mortege note payable PRE Other information a. The banknotes, issued August 1, 2018, are due on July 31 2019, and pay interest at a rate of 2. payable at maturity b The mortgage note is due on March 1, 2019 Interest at 1155 has been paid up to December 21 (assume is a realistic rate) Manufacturing intended at December 31, 2018 to refinance the note on its due date with a new year mortgage note. In fact, on March 1, Manufacturing paid $442.000 in cash on the principal balance and refinanced the remaining 5.000.000 Included in the accounts receivable balance at December 31, 2018, were two subsidiary accounts that had been overpaid and had crede balances totaling $19,050. 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 $25,400 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 Required 1. Prepare any necessary adjusting journal entries at December 31, 2018. pertaining to each tem of other information (a-d). 2. Prepare the current and long-term liability sections of the December 31, 2018 balance sheet Complete this question by entering your answers in the tabs below. Prepare any necessary adjusting your entries at December 31, 2018, pertaining to required for a transaction avant select "No journal entry required in the first account of other information (ad). If no antry is Journal entry worksheet மென காப்பு

Answer 1

solution: Transaction a. 'Adjusting Journal Entries General Journal Interest Expense .. Interest Payable Debit (6) Creaites) $30,350 $30,350 bi No adjusting Entry is required C. $19,050 Accounts Receivable : - Advances from customers $19,050 INS . d. $29,000 Rent Revenné :. Un earned Rent Revenue $29,200

Explanation a) Interest Expense $607.000 x 12%.* . - $30,350 b) No adjusting entry is required. The reason is that the interest has been paid. up to December 3i. Giver the information, the manufacturing would include $442,000 in its current Liability section, anal the remaining $1,000,000 in the long term Liability section. The reason is that manufacturing has o the intent to refinance; and (2) demonstrates the ability to refinance in the amount of $1,000,000 after the end of 2018 but before the 2018 financial statements are issued. a) Rent Revenue = $26.400 x 10 / => $22,000 :

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