Exercise 5-11 Accounting for notes receivable LO 5-4

Poole Enterprises loaned $25,000 to Boyd Co. on September 1, 2014, for one year at 6 percent interest.

Required

Show the effects of the following transactions in a horizontal statements. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). The letters NA indicate that an element is not affected by the event. (Do not round intermediate calculations and round final answers to nearest dollar amount. Enter any decreases to account balances and cash outflows with a minus sign.)

(1)

The loan to Boyd Co.

(2)

The adjusting entry at December 31, 2014.

(3)

The adjusting entry, the collection of the principal balance, and the collection of interest on September 1, 2015.

POOLE ENTERPRISES

Horizontal Statements Model

Date

Assets

=

Equity

Income Statement

Statement of Cash Flow

Cash

+

Notes Receivable

+

Interest Receivable

=

Retained Earnings

Revenue

Expense

=

Net Income

1. 9/1/14

+

+

=

=

2. 12/31/14

+

+

=

=

3. 9/1/15

+

+

=

=

9/1/15

+

+

=

=

9/1/15

+

+

=

=