ACCT110 Week 6 Activity

ACCT110 Week 6 Activity

Enter your responses to each question, then save your document and upload it to Blackboard under the Week 6 Activity. 3 pts. each. Entry except for Question 4.  They are 6.5 pts. each

1. The following items appear on the balance sheet of a company with a two-month operating cycle. Identify the proper classification of each item as follows:       

Directions: At the beginning of each line, write C if the item is a current liability, L if it is a long-term liability, or N if it is not a liability

Notes payable (due in 13 to 24 months).

Notes payable (due in 6-12 months).

Notes payable (mature in five years).

Current portion of long-term debt.

Notes payable (due in 120 days).

FUTA taxes payable.

Accounts receivable.

Sales taxes payable.

Salaries payable.

Wages payable.

2. Sylvester Systems borrows $110,000 cash on May 15, 2015, by signing a 60-day, 12% note.              

 Directions: Answer the following questions:

1. On what date does this note mature?

2. Suppose the face value of the note equals $110,000, the principal of the loan.
Complete the journal entries to record (a) issuance of the note and (b) payment of the note at maturity.

Directions: Using the information in 2 above, enter the dollar amount for both the debit and credit sides on each journal entry.(don’t forget the description for each entry.)

Debit    Credit
a: 15-May Cash
Notes Payable

b: 14-Jul Interest Expense
Notes Payable
Cash

3. Keesha Co. borrows $200,000 cash on November 1, 2015, by signing a 90-day, 9% note with a face value of $200,000.   

Complete the journal entries below to record: (Don’t forget your descriptions for the entries)

(a) issuance of the note   
Debit    Credit
Nov. 1    Cash
Notes Payable

(b) accrual of interest at the end of 2015         

Dec. 31,     Interest Expense
Interest Payable

(c) payment of the note at maturity.

Jan. 30    Interest Expense
Interest Payable
Notes Payable
Cash

4. Prepare any necessary adjusting entries at December 31, 2015, for Melbourne Company’s year-end financial statements for each of the following separate transactions and events. If no entry is required, reply “No entry necessary” and explain.

1. Melbourne Company guarantees the $100,000 debt of a supplier. The supplier will probably not default on the debt.

2. A disgruntled employee is suing Melbourne Company. Legal advisers believe that the company will probably need to pay damages, but the amount cannot be reasonably estimated.

Here’s the SOLUTION

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