Question

In: Accounting

Analyzing and Computing Financial Statement Effects of Loan Interest Huddart Company gave a creditor a 90-day,...

Analyzing and Computing Financial Statement Effects of Loan Interest

Huddart Company gave a creditor a 90-day, 8% note payable for $7,200 on December 16.

a. Prepare the journal entry to record the year-end December 31st accounting adjustment Huddart must make.

Description Debit Credit
AnswerInterest expenseInterest payable Answer Answer
AnswerInterest expenseInterest payable Answer Answer

b. Post the journal entries from part a to their respective T-accounts.

Interest Payable
Answer Answer
Interest Expense
Answer Answer

c. Record the transaction from part a in the financial statement effects template.

Transaction Cash Asset + Noncash Assets = Liabilities + Contr. Captial + Earned Capital Revenue - Expenses = Net income
To record year-end adjustment. Answer Answer Answer Answer Answer Answer Answer Answer

Solutions

Expert Solution

  • All working forms part of the answer
  • Requirement ‘a’

--Interest needs to be calculated from 16 Dec to 31 Dec = 15 days.

--No. of days in a year taken = 360 days.

--Interest expense = 7200 x 8% x 15/360 = $ 24

Description

Debit

Credit

Interest expense

$               24.00

        Interest payable

$              24.00

  • Requirement ‘b’

Interest Payable

$                   24.00

Interest Expense

$               24.00

  • Requirement ‘c’

Transaction

Cash Asset

+

Noncash Assets

=

Liabilities

+

Contr. Captial

+

Earned Capital

Revenue

-

Expenses

=

Net income

To record year-end adjustment.

$                    -  

$                   -  

$               24.00

$                     -  

$           (24.00)

$              -  

$       24.00

$        (24.00)


Related Solutions

Identifying and Analyzing Financial Statement Effects of Dividends The stockholders’ equity of Palepu Company at December...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders’ equity of Palepu Company at December 31, 2015, appears below. During 2016, the following transactions occurred: Required a. Using the financial statement effects template, illustrate the effects of these transactions. b. Prepare the journal entries for these transactions. c. Post the journal entries from b to the related T-accounts. d. Prepare a retained earnings reconciliation for 2016 assuming that the company reports 2016 net income of $283,000. Hint: Do not...
Analyzing and Identifying Financial Statement Effects of Dividends The stockholders’ equity of Kinney Company at December...
Analyzing and Identifying Financial Statement Effects of Dividends The stockholders’ equity of Kinney Company at December 31, 2015, is shown below: 5% preferred stock, $100 par value, 10,000 shares authorized; 4,000 shares issued and outstanding $400,000 Common stock, $5 par value, 200,000 shares authorized; 50,000 shares issued and outstanding 250,000 Paid-in capital in excess of par value-preferred stock 40,000 Paid-in capital in excess of par value-common stock 300,000 Retained earnings 656,000 Total stockholders' equity $1,646,000 The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December 31, 2011, is shown below. 5% preferred stock, $100 par value, 10,000 shares authorized; 4,000 shares issued and outstanding $ 400,000 Common stock, $5 par value, 200,000 shares authorized; 50,000 shares issued and outstanding 250,000 Paid-in capital in excess of par value—preferred stock 40,000 Paid-in capital in excess of par value—common stock 300,000 Retained earnings 656,000 Total stockholders' equity $1,646,000 The following transactions, among...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December 31, 2016, is shown below. 5% preferred stock, $100 par value, 10,000 shares authorized; 6,000 shares issued and outstanding $600,000 Common stock, $5 par value, 200,000 shares authorized; 70,000 shares issued and outstanding 350,000 Paid-in capital in excess of par value—preferred stock 50,000 Paid-in capital in excess of par value—common stock 400,000 Retained earnings 747,000 Total stockholders' equity $2,147,000 The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December 31, 2011, is shown below. 5% preferred stock, $100 par value, 18,000 shares authorized; 8,000 shares issued and outstanding $ 800,000 Common stock, $5 par value, 200,000 shares authorized; 50,000 shares issued and outstanding 250,000 Paid-in capital in excess of par value—preferred stock 40,000 Paid-in capital in excess of par value—common stock 300,000 Retained earnings 656,000 Total stockholders' equity $2,046,000 The following transactions, among...
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Verrecchia Company at...
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Verrecchia Company at December 31, 2011, follows: Common stock, $ 5 par value, 350,000 shares authorized; 150,000 shares issued and outstanding $ 750,000 Paid-in capital in excess of par value 600,000 Retained earnings 346,000 During 2012, the following transactions occurred: Jan. 5 Issued 10,000 shares of common stock for $12 cash per share. Jan. 18 Purchased 4,000 shares of common stock for the treasury at $14 cash...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December 31, 2016, is shown below. 5% preferred stock, $100 par value, 10,000 shares authorized; 6,000 shares issued and outstanding $600,000 Common stock, $5 par value, 200,000 shares authorized; 70,000 shares issued and outstanding 350,000 Paid-in capital in excess of par value—preferred stock 50,000 Paid-in capital in excess of par value—common stock 400,000 Retained earnings 747,000 Total stockholders' equity $2,147,000 The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Verrecchia Company at...
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Verrecchia Company at December 31, 2011, follows: Common stock, $ 5 par value, 350,000 shares authorized; 150,000 shares issued and outstanding $ 750,000 Paid-in capital in excess of par value 600,000 Retained earnings 346,000 During 2012, the following transactions occurred: Jan. 5 Issued 10,000 shares of common stock for $12 cash per share. Jan. 18 Purchased 4,000 shares of common stock for the treasury at $14 cash...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December 31, 2016, is shown below. 5% preferred stock, $100 par value, 10,000 shares authorized; 6,000 shares issued and outstanding $600,000 Common stock, $5 par value, 200,000 shares authorized; 70,000 shares issued and outstanding 350,000 Paid-in capital in excess of par value—preferred stock 50,000 Paid-in capital in excess of par value—common stock 400,000 Retained earnings 747,000 Total stockholders' equity $2,147,000 The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Verrecchia Company at...
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Verrecchia Company at December 31, 2011, follows: Common stock, $ 5 par value, 350,000 shares authorized; 180,000 shares issued and outstanding $ 900,000 Paid-in capital in excess of par value 600,000 Retained earnings 346,000 During 2012, the following transactions occurred: Jan. 5 Issued 10,000 shares of common stock for $11 cash per share. Jan. 18 Purchased 4,000 shares of common stock for the treasury at $15 cash...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT