HW_12 - Problem 13-4 Requirement 1 a. Interest expense...

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Problem 13-4 Requirement 1 a. Interest expense ($600,000 x 10% x 5 / 12 ) . .................... 25,000 Interest payable . .............................................. 25,000 b. No adjusting entry since interest has been paid up to December 31. $950,000 can be reported as a noncurrent liability, because (a) intent and (b) ability to refinance has been demonstrated for that amount. c. Accounts receivable (to eliminate the credit balance) . .. 18,000 Advances from customers . .............................. 18,000 d. Rent revenue ( 10 / 12 x $30,000) ............................... 25,000 Unearned rent revenue .................................... 25,000 Requirement 2 C URRENT L IABILITIES : Accounts payable $ 35,000 Current portion of long-term debt250,000 Accrued interest payable 25,000 Advances from customers 18,000 Unearned rent revenue 25,000 Bank notes payable 600,000 Total current liabilities $953,000 L ONG - TERM L IABILITIES : Mortgage note payable $950,000
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Problem 13-6 a. This is a loss contingency. Eastern can use the information occurring after the end of the year in determining appropriate disclosure. It is unlikely that Eastern would choose to accrue the $122 million loss because the judgment will be appealed and that outcome is uncertain. A disclosure
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HW_12 - Problem 13-4 Requirement 1 a. Interest expense...

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