ALL homework assignments must be completed by using some type of computer software program, e.g.,
YOU WILL NOT RECEIVE FULL CREDIT FOR THE HOMEWORK UNLESS IT IS
COMPLETED BY USING A COMPUTER.
NO CREDIT WILL BE GIVEN FOR LATE HOMEWORK.
When completing your homework assignments DO NOT use any abbreviations, e.g., spell out Governmental
Accounting Standards Board instead of simply writing GASB.
As discussed during class, you can work on these homework assignments in groups or as an individual.
G Company signed a three-month, zero-interest-bearing note on November 1, 2010 for
the purchase of $150,000 of inventory.
The face value of the note was $152,205.
Assuming G used a
“Discount on Note Payable” account to initially record the note and that the discount will be amortized
equally over the 3-month period, prepare the adjusting journal entry (if any) that G should make on
December 31, 2010.
Assume that G only closes its books every December 31.
S Company borrowed $175,000 on April 1.
The loan carries an interest rate of 12%
and requires all of the principal to be paid in one year.
Prepare the adjusting journal entry (if any) that S
should make on December 31.
Assume that S only closes its books every December 31.
On December 31, 2010, I Company had $2,000,000 of short-term notes payable due
on February 14, 2011.
On January 10, 2011, I arranged a line of credit with County Bank which allows I
to borrow up to $1,500,000 at one percent above the prime rate for three years.
On February 2, 2011, I
borrowed $1,200,000 from County Bank and used $500,000 additional cash to liquidate $1,700,000 of the
short-term notes payable.
What amount of short-term notes payable should I report as current liabilities
on its December 31, 2010 balance sheet?
Support your answer/show your work.
Note that I’s balance
sheet was issued on March 5, 2011.