Question

Saved The unadjusted trial balance of the Manufacturing Equitable at December 31, 2021, the end of its fiscal year, included the following account balances. Manufacturing's 2021 financial statements were issued on April 1, 2022 Accounts receivable Accounts payable 12% notes, payable to bank Mortgage note payable $ 95,750 37,600 667,000 1,442,000 Other information: a. The bank notes, issued August 1, 2021, are due on July 31, 2022, and pay interest at a rate of 12%, payable at maturity b. The mortgage note is due on March 1, 2022. Interest at 11% has been paid up to December 31 (assume 11% is a realistic rate) Manufacturing intended at December 31, 2021, to refinance the note on its due date with a new 10-year mortgage note. In fact, on March 1, Manufacturing paid $442,000 in cash on the principal balance and refinanced the remaining $1,000,000 c. Included in the accounts receivable balance at December 31, 2021, were two subsidiary accounts that had been overpaid and had credit 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, 2021, Manufacturing rented a portion of its factory to a tenant for $26,400 per year, payable in advance. The payment for the 12 months ended October 31, 2022, was received as required and was credited to rent revenue. Required: 1. Prepare any necessary adjusting journal entries at December 31, 2021, pertaining to each item of other information (a-d). 2. Prepare the current and long-term liability sections of the December 31, 2021, balance sheet. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare any necessary adjusting journal entries at December 31, 2021, pertaining to each item of other information (a-d). (if no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list

Answer 1

Date	Accounts and Explanations	Debit	Credit
(a)	Interest expense (667,000*12%*5/12)	33,350
	Interest payable		33,350
(b)	No Journal Entry required
(c)	Accounts receivables	19,050
	Deferred revenue		19,050
(d)	Rent revenue (26,400*10/12)	22,000
	Deferred rent revenue		22,000

Liabilities and Shareholders' Equity
Current Liability:
Accounts payable	37,600
Bank Notes payable	667,000
Current portion of long term debt	442,000
Interest payable	33,350
Advances from Customers	19,050
Deferred rent revenue	22,000
Total current liabilities	1,221,000
Long term liabilities:
Mortgage notes payable	1,000,000
Total long term liabilities	1,000,000