Question
Novak Incorporated provides solar energy services to Toronto. Novak needed to buy additional solar energy panels to meet the demand for its energy product. The
Novak Incorporated provides solar energy services to Toronto. Novak needed to buy additional solar energy panels to meet the demand for its energy product. The Government of Ontario offered an interest-free forgivable loan to Novak in the amount of $400,000. The loan will be forgiven if Novak is able to produce a stated number of kilowatts of energy per year for the next five years. If these conditions are not met, the amount is due to the government in full in five years. Novak believes it will be able to meet the conditions. Novak recently obtained a similar loan from the bank with an annual interest rate of 9%.
a).Prepare the entry on December 31, 2020, to record the interest-free loan.
| Date | Account Titles and Explanation | Debit | Credit |
|
| |||
b)Prepare any adjusting journal entry that is necessary at December 31, 2021, the companys fiscal year end.
| Date | Account Titles and Explanation | Debit | Credit |
| Dec. 31, 2021 | |||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Operations And Supply Chain Management
Authors: F. Robert Jacobs, Richard Chase
14th Edition
287
