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Question
On December 1, 2015, a company converted an existing account receivable in the amount of $6,000 to a note receivable to allow an extended payment period. The note is due in three months and includes an annual interest rate of 9%, The company prepares year-end financial statements on December 31 and recorded adjusting entries at that time. What entry should the company make on March 1, 2016, when the interest is paid at maturity?
A) Debit Cash and credit Notes Receivable for $6,135
B) Debit Cash for $6,135, credit Notes Receivable for $6,000, and credit Interest Revenue for $135
C) Debit Cash for $135, credit Interest Receivable for $45, and credit Interest revenue for $90
D) Debit Cash for $135, credit Interest Receivable for $45, and credit Interest Revenue for $90
Answer
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Related questions
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Q:
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Q:
Which of the following statements about straight-line depreciation is correct?
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Q:
Which of the following is not an amount that is needed to calculate straight-line depreciation?
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Q:
Which of the following statements most appropriately describes the purpose of depreciating a long-lived tangible asset?
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D) Debit Equipment for $450,000, debit Operating Expenses for $50,000, credit cash for $250,000, and credit Notes Payable for $250,000
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Under the cost principle, a company capitalizes:
A) all ordinary repair expenditures incurred in the use of an asset.
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Q:
The following information was summarized from the adjusted trial balance of Reliance Yacht Repair, Inc. as of September 30, 2015, the end of the companys fiscal year. Accounts Payable
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6,000 Accumulated DepreciationEquipment
2,000 Cash
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4,000 Insurance Expense
500 Interest Expense
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2,500 Notes Receivable (short-term)
5,500 Prepaid Rent
500 Retained Earnings
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1,500 Required:
Part a. Prepare the closing entry for the company for the year ended September 30, 2015.
Part b. Draw a T-account for the Retained Earnings account. Enter the beginning balance into the T-account, post the closing entry, and then determine the ending balance.
Part c. Prepare a post-closing trial balance at September 30, 2015.
Q:
On December 31, 2016, Ditka Inc. had Retained Earnings of $267,800 before its closing entries were prepared and posted. During 2016, the company had service revenue of $168,100 and interest revenue of $81,300. The company used supplies in the amount of $87,900, advertising expenses were $16,400, salaries and wages totaled $18,300, and income tax expense was calculated as $13,700. During the year, the company declared and paid dividends of $6,000.
Required:
Part a. Prepare the closing entries dated December 31, 2016.
Part b. Draw a T-account for the Retained Earnings account. Enter the beginning balance into the T-account, post the closing entries, and then determine the ending balance.