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Unformatted text preview: 11, what is the amount of the liability to the
bank ? (Om it the "$" sign in your re sponse .)
$ Bank liability 121,800 c. Prepare the journal entry to rec ord is s uanc e of the note pay able on Oc tober 31, 2011. (Om it the "$"
sign in your re sponse .)
Oc t. 31 Cas h Debit
120,000 Notes pay able Credit
120,000 d. Prepare the adjus ting entry to ac c rue interes t on the note at Dec ember 31, 2011. (Do not round your
inte rm e dia te ca lcula tions a nd round your fina l a nsw e r to ne a re st dolla r a m ount. Om it the "$"
sign in your re sponse .)
Dec . 31 Interes t ex pens e Debit Credit
900 Interes t pay able 900 e . As s ume the c ompany prepared a balanc e s heet at Marc h 31, 2012. State the amount of the liability to
the bank at this date. (Om it the "$" sign in your re sponse .)
Bank liability $ 124,500 Explanation: a . The total interes t ex pens e over the life of the note is $5,400 ($120,000 × 0.09 × 6/12 = $5,400). http://ezto.mhecloud.mcg r aw- hill.com/hm_accounting .tpx?todo= pr intview 8/16 1/23/2014 Assig nment Pr int View
The monthly interes t ex pens e is $900 ($5,400 ÷ 6 = $900).
b. The liability to the bank at Dec ember 31, 2011, is $121,800 (Princ ipal, $120,000 + $1,800 ac c rued
d. To ac c rue interes t ex pens e for Dec ember on note pay able ($120,000 × 9% × 1/12).
e . The liability to the bank at Marc h 31, 2012, is $124,500, c ons is ting of $120,000 princ ipal plus $4,500
ac c rued interes t for five months . 9. aw ar d: 1 out of
Among the ledger ac c ounts us ed by Glenwood Speedway are the following: Prepaid Rent, Rent Ex pens e,
Unearned Admis s ions Revenue, Admis s ions Revenue, Prepaid Printing, Printing Ex pens e, Conc es s ions
Rec eivable, and Conc es s ions Revenue. For eac h of the following items , provide the journal entry (if one is
needed) to rec ord the initial trans ac tion and provide the adjus ting entry , if any , required on May 31, the end
of the fis c al y ear.
a . On May 1, borrowed $300,000 c as h from National Bank by is s uing a 12 perc ent note pay able due in
three months .
b. On May 1, paid rent for s ix months beginning May 1 at $30,000 per month.
c. On May 2, s old s eas on tic k ets for a total of $910,000 c as h. The s eas on inc ludes 70 rac ing day s : 20 in
May , 25 in June, and 25 in July .
d. On May 4, an agreement was reac hed with Snac k -Bars , Inc ., allowing that c ompany to s ell
refres hments at the trac k in return for 10 perc ent of the gros s rec eipts from refres hment s ales .
(In ca se s w he re no e ntry is re quire d, ple a se se le ct the option "No journa l e ntry re quire d" for your
a nsw e rs to gra de corre ctly. Le a ve no ce lls bla nk - be ce rta in to e nte r "0" w he re ve r re quire d.
Round your a nsw e rs to the ne a re st w hole dolla r. Om it the "$" sign in your re sponse .)
a. May 1 Ca sh
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