Intermediate Accounting 1

Qui : 1

New Brunswick Inc. is a reliable, long-term customer of Halifax Corporation. Due to the unexpected costs of rapid expansion, New Brunswick Inc. was unable to pay its account receivable when it came due on January 1, 2021. Halifax Corporation agreed to accept a $182,000 non-interest bearing note that would be due on January 1, 2023. This type of financing would typically have an interest rate of 12%. Assume that Halifax Corporation uses the effective interest method to account for its non-interest bearing notes.

Required:

Calculate the amount at which to record the note receivable on January 1, 2021. (2 marks) Prepare the journal entry for the note for Halifax Corporation on January 1, 2021. (1 mark) Prepare the journal entries for the note for Halifax Corporation on its year ends of December 31, 2021 and December 31, 2022. (4 marks)

Qui -2 The following information was taken from the accounts receivable records of Halifax Corporation at its fiscal year-end of November 30, 2021:

Number of Days Account Owing

Outstanding Balance

Percentage Estimated to Be Uncollectible

0 30 days outstanding

$181,200

0.7%

31 60 days outstanding

69,300

2.0%

61 90 days outstanding

41,900

3.0%

91 120 days outstanding

23,000

5.5%

Over 120 days outstanding

10,600

9.0%

Required:

Prepare the year-end adjusting journal entry for bad debts, assuming the allowance method is used and that the allowance for doubtful accounts had a debit balance of $6,200 prior to the adjustment. (3 marks) Assume that on October 10, 2021, Halifax Corporation wrote off an account receivable owing from one of

Question 3 (6 points) On June 1, 2021, New Age Design Ltd. agreed to lend money to Nova Scotia Inc. and received in exchange a $300,000, 1-year, interest bearing note. New Age Design charges interest to Nova Scotia at a rate of 6%. New Age Design has a December 31 year-end.

Required

Record all journal entries for New Age Design Ltd. for the note on each of the following dates:

June 1, 2021 the date the loan was made (1 mark) December 31, 2021 the year-end date (2 marks) June 1, 2022 the maturity date of the note (3 marks)