Question

tio ter 13 HW Problems 10 Problem 13-4 Various liabilities [Lo13-1, 13-2, 13-3,13-4 The unadjusted trial balance of the Manufacturing Equitable account balances. Manufacturing's 2018 financial statements were issued on April 1, 2019 at December 31, 2018, the end of its fiscal year, included the following $ 95,750 37.600 667,000 1,442,000 payable Mortgage note payable Other information: a. The bank notes, issued August 1, 2018, are due on Juya 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 (assume T% is a 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 $442,000 in cash on the principal balance and refinanced the remaining $ c Included in the accounts receivable balance at December 31, 2018, were two subsidiary accounts that had been overpald 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, 2018, 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, 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 item of other information (a-d). 2. Prepare the current and long-term liablity sections of the December 31, 2018, balance sheet Complete this question by entering your answers in the tabs below. k Prev 9 of 10E Next>

Answer 1

Part:1
Item No.	Account Title and Explanation	Debit($)	Credit($)
a	Interest Expense	33,350
	Interest Payable(667000*12%*5/12)		33,350
b.	No Adjusting entry is required(The reason is that the interest has been paid up to December 31.)
c.	Accounts Receivable	19050
	Advance from customers		19050
d.	Rent Revenue	22,000
	Unearned rent revenue(26400*10/12)		22000
Part :2	Balance Sheet (partial)   At December 31, 2018
	Liabilities & Share holder's Equity	Amount($)
	Current Liability:
	Accounts Payable	37600
	Bank Notes Payable	667000
	Current portion of long term Debt	442000
	Interest Payable	33350
	Advances from Customers	19050
	Unearned rent revenue	22000
	Total Current Liabilities	1,221,000
	Long term Liabilities
	Mortagage Notes Payable	1000000
	Total Long term Liabilities	1000000

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