(5 points) On August 1, 2014 Y borrowed $1,000,000 at 3%. Y pays interest every 6 months with interest payments every February 1 and August 1. Y will repay $400,000 of the principal on August 1, 2015 and the remainder on February 1, 2016. Assume Y only makes AJEs every December 31 AND does NOT make reversing entries. Prepare the entries Y should make on:

August 1, 2014

December 31, 2014

February 1, 2015

August 1, 2015

December 31, 2015

February 1, 2016

(0.5 point each) Prepare the AJEs that should be made on 09-30-13, the end of the accounting year, for each of the following situations. If no AJE is required, indicate none. Assume the firm only makes AJEs at the end of the accounting year.

On July 1, 2013, the firm collected $18,000 of rent for 12 months in advance. The journal entry to record the receipt included a credit to an income statement account.

On February 1, 2013, the company borrowed $120,000 at 4%. The principle is due on February 1, 2017. The interest is due every six months and the first interest payment took place on August 1, 2013.

On June 1, 2011, the company borrowed $2,500,000 for five years at 3%. Interest is due and payable every quarter and the first interest payment took place on September 1, 2011. The principle is payable in five equal installments and the first principle payment took place on June 1, 2012.

On February 1, 2013 the firm paid $1,600 for an 8-month equipment rental. The journal entry to record the payment included a debit to a real account.

3. (5 points) Zena Companys financial records showed the following selected items for 2014:

Advertising receipts $560,000 Land rental revenues $250,000

Interest paid on borrowings $100,000 Wage expense $190,000

Zena follows the accrual basis of accounting. The following balances were taken from Zenas balance sheets:

12-31-14 12-31-13

Advertising receivables 20,000 15,000

Prepaid advertising costs 50,000 44,000

Wages payable 18,000 25,000

Interest payable 60,000 56,000

Unearned land rental revenue 63,000 60,000

What were advertising-related revenues for 2014?

What was interest expense for 2014?

How much cash was paid out for wages and salaries during 2014?

How much cash was collected for land rentals during 2014?

4. (1 point each) Prepare AJEs that should be made on 12-31-15, the end of the accounting year, for each of the following situations. If no AJE is required, indicate none. Assume the company only makes AJEs at the end of the accounting year. In addition, identify the impact, if any, on the financial statements if you failed to make the appropriate AJE. Indicate NE for no impact, U for understatement, and O for overstatement. Use the following format to indicate the impact of failing to make the required entry for each situation.

Assets Liabilities Expenses Revenues Net Income Owners Equity

XX XX XX XX XX XX

On July 1, 2015, the company rented a machine for 10 months and paid $5,000 in advance. The journal entry to record the payment included a debit to a permanent account.

On March 1, 2015, the company collected $1,800 of rent for 12 months in advance. The journal entry to record the receipt included a credit to a balance sheet account.

On September 1, 2015, the company collected $6,000 as rent for 6 months in advance. The journal entry to record the receipt included a credit to a temporary account.

On February 1, 2015, the company invested in a $100,000, 10-year bond that pays 3% interest every six months starting August 1, 2015.

On April 30, 2015, the company rented equipment for 10 months and paid $10,000 in advance. The journal entry to record the payment included a debit to a temporary account.