Cling-on Ltd. sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. On July 1, 2018, Cling-on received a three-month $11,600 bank loan from City Credit Union due on September 30, 2018, and bearing interest at 3%. Interest is payable at maturity. Note that the company records adjusting entries annually at its year end, December 31.
Question 8 Cling-on Ltd. sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. On July 1, 2018, Cling-on received a three-month $11,600 bank loan from City Credit Union due on September 30, 2018, and bearing interest at 3%. Interest is payable at maturity. Note that the company records adjusting entries annually at its year end, December 31. During the next four months, Cling-on incurred the following: Sept. 1 Purchased inventory on account for $14,100 from Black Diamond, terms n/30. The company uses a perpetual inventory system. 30 Repaid the $11,600 bank loan payable to City Credit Union (see opening balance), as well as any interest owed. Oct. 1 Issued a six-month, 4%, $14,100 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on the first of each month. 2 Borrowed $26,300 from Montpelier Bank for 12 months at 3% to finance the building of a new climbing area for advanced climbers. (Use the asset account Buildings.) Interest is payable monthly on the first of each month. Nov. 1 Paid interest on the Black Diamond note and Montpelier Bank loan. Dec. 1 Paid interest on the Black Diamond note and Montpelier Bank loan. Purchased a vehicle for $29,500 from Auto Dealer Ltd. to transport clients to nearby climbing sites. Paid $8,400 as a down payment and borrowed the remainder from Atlantic Bank for 12 months at 3%. Interest is payable quarterly, at the end of each quarter. 31 Recorded accrued interest for the Black Diamond note and the Montpelier and Atlantic loans. Record the above transactions. (Post entries in the order presented in the problem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to the nearest whole dollar, e.g. 5,275.) Date Act Titles and Explanati Sept. 30 (To record interest on Black Diamond note.) (To record interest on Montpelier Bank loan.) (To record interest on Black Diamond note.) (To record interest on Montpelier Bank loan.) Open T accounts for the Interest Expense, Interest Payable, Bank Loan Payable, and Notes Payable accounts and enter all opening balances. Post the above entries. (Round answers to the nearest whole dollar, e.g. 5,275. Post entries in the order of journal entries presented in the previous part.) Interest Expense Interest Payable Notes Payable Bank Loan Payable Assuming there is no other interest expense than that recorded in the transactions above, show the income statement presentation of interest expense for the year ended December 31. (Round answer to the nearest whole dollar, e.g. 5,275.) CLING-ON LTD. Income Statement (partial) Year Ended December 31, 2018 Other revenues and expenses SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Show the current liability section of the statement of financial position as at December 31, listing balances of accounts affected by the above transactions. (Round answers to the nearest whole dollar, e.g. 5,275.) CLING-ON LTD. Statement of Financial Position (partial) December 31, 2018 Current liabilities
