week 4 Ch 11 - $900 and should be reported as other...

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Ch. 11 Textbook Exercises Questions 1 and 2 Exercises E11-2 and E-11-18 University of Phoenix ACC/281 Instructor: Hong Zhao By Scott Ward
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Question 1 1. Jill Loomis believes a current liability is a debt that can be expected to be paid in one year. Is Jill correct? Explain. No, she is not correct, a current liability is a debt that can be paid through the creation of other liabilities or paid within the end of the company’s operating cycle.
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Question 2 2. Frederickson Company obtains $40,000 in cash by signing a 9%, 6-month, $40,000 note payable to First Bank on July1. Frederickson’s fiscal year ends on September 30.What information should be reported for the note payable in the annual financial statements? As for the balance sheet, they will need to put Notes Payable at $40,000 and Interest payable at $900 and report them as current liabilities. The income statement will show Interest Expense of
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Unformatted text preview: $900 and should be reported as other expenses. Exercise E11-2 (a) June 1 Cash. ................................................................. 90,000 Notes Payable. ...................................... 90,000 (b) June 30 Interest Expense. .............................................. 900 Interest Payable. .................................. 900 (c) Dec. 1 Notes Payable. ................................................. 90,000 Interest Payable. .................................. 5,400 Cash. ..................................................... 95,400 (d) Total Financing Cost: $5,400 Exercise E-11-18 (a) Jan. 1 Cash 562,613 Discount on Bonds Payable 37,387 Bonds Payable 600,000 (b) July 1 Bond Interest Expense 28,131 Discount on Bonds Payable 1,131 Cash 27,000 (c) Dec. 31 Bond Interest Expense 28,187 Discount on Bonds Payable 1,187 Bond Interest Payable 27,000...
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week 4 Ch 11 - $900 and should be reported as other...

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