Question

The unadjusted trial balance of the s 2018 financial statements were issued on April 1, 2019 32,000 663,000 310,000 Bank notes payable Other information a The bank notes, issued August 1, 2018, are due on July 31, 2019, and pay interest at a rate of 10%, payable at maturity. mortgage note is due on March 1, 2019 interest at 9% has been paid up to December 31 (assume 9% is a realistic rate). e and r s were of two major customers who were expected to order more merchandise from to those future d On 1. Prepare any necessary adjusting journal entries at December 31, 2018, pertaining to each item of other in required for a t

Answer 1

1.

Transaction	General Journal	Debit	Credit
a.	Interest expense ($663000 x 10% x 5/12)	27625
	Interest payable		27625
	(To record interest accrued on bank notes payable)
b.	No journal entry required
c.	Accounts receivable	21500
	Advances from customers		21500
	(To record advances from customers)
d.	Rent revenue ($21000 x 10/12)	17500
	Unearned rent revenue		17500
	(To record unearned rent revenue)

2.

Manufacturing Equitable
Balance Sheet (Partial)
December 31, 2018
Current liabilities:
Accounts payable	32000
Bank notes payable	663000
Long-term debt (current portion)	330000
Interest payable	27625
Advances from customers	21500
Unearned rent revenue	17500
Total current liabilities	1091625
Long-term liabilities:
Mortgage note payable	980000