The ledger of Flounder Corp. on March 31 of the current year includes the following selected accounts
Question:
The ledger of Flounder Corp. on March 31 of the current year includes the following selected accounts before quarterly adjusting entries have been prepared:
Debit | Credit | |||
---|---|---|---|---|
Prepaid Insurance | $3,060 | |||
Supplies | 2,930 | |||
Equipment | 25,950 | |||
FV-OCI Investments | 162,000 | |||
Accumulated Depreciation—Equipment | $7,440 | |||
Notes Payable | 26,200 | |||
Unearned Rent Revenue | 9,400 | |||
Rent Revenue | 59,300 | |||
Interest Expense | -0- | |||
Salaries and Wages Expense | 14,700 |
An analysis of the accounts shows the following:
1. | The equipment depreciation is $310 per month. | |
2. | One half of the unearned rent was earned during the quarter. | |
3. | Interest of $393 has accrued on the notes payable. | |
4. | Supplies on hand total $905. | |
5. | Insurance expires at the rate of $255 per month. | |
6. | The FV-OCI Investments were purchased for $162,000 on March 1. No investments were purchased or sold after that date. The fair value on March 31 was $182,000. |
1) Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
2) If the notes payable have been outstanding since January 1 of the current year, what is the annual interest rate on the notes payable? (Round answer to 2 decimal places, e.g. 15.25%.)
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso