Question
On January 1, the first day of the fiscal year, Shiller Company borrowed $85,000 by giving a seven-year, 7% installment note to Soros Bank. The
On January 1, the first day of the fiscal year, Shiller Company borrowed $85,000 by giving a seven-year, 7% installment note to Soros Bank. The note requires annual payments of $15,772, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $5,950 and principal repayment of $9,822.
Required:
A. | Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account titles.
| ||||
B. | Explain how the notes payable would be reported on the balance sheet at the end of the first year. |
none
X
Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shiller Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
none
X
Journal
a. Journalize the entries to record the selected transactions. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 |
| |||||||
2 |
| |||||||
3 |
| |||||||
4 |
| |||||||
5 |
|
Solution
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 |
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
Points:
Feedback
Check My Work
Explanation
none
X
Final Question
B. Explain how the notes payable would be reported on the balance sheet at the end of the first year.
Notes payable are reported as liabilities on the balance sheet. The portion of the note payable that is due within selector 1
six months
one year
three months
is reported as a selector 2
current liability
contra liability
long-term liability
. The remaining portion of the note payable that is not due within that period of time is reported as a(n) selector 3
current liability
adjustment to retained earnings
long-term liability
.
Points:
Feedback
Check My Work
Explanation
none
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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