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Semmy [17]
3 years ago
15

On June 30, 2018, the Esquire Company sold some merchandise to a customer for $48,000. In payment, Esquire agreed to accept a 9%

note requiring the payment of interest and principal on March 31, 2019. The 9% rate is appropriate in this situation. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2018 interest accrual, and the March 31, 2019 collection. 2. If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over-or understated in 2018 and 2019
Business
1 answer:
emmainna [20.7K]3 years ago
6 0

Answer:

Esquire Company

1. Journal Entries

June 30, 2018:

Debit 9% Notes Receivable $48,000

Credit Sales Revenue $48,000

To record the sale of goods on account.

December 31, 2018:

Debit Interest Receivable $2,160

Credit Interest Revenue $2,160

To accrue interest revenue ($48,000 * 9% * 6/12).

March 31, 2019:

Debit Interest Receivable $1,080

Credit Interest Revenue $1,080

To accrue interest revenue  ($48,000 * 9% * 3/12).

March 31, 2019:

Debit Cash $51,240

Credit Notes Receivable $48,000

Credit Interest Receivable $3,240

To record the collection of cash for goods and accruing interest.

2. If the December 31 adjusting entry for the interest accrual is not prepared, income before income taxes will be understated in 2018 and overstated in 2019 by $2,160.

Explanation:

a) Data and Analysis:

June 30, 2018: 9% Notes Receivable $48,000 Sales Revenue $48,000

December 31, 2018: Interest Receivable $2,160 Interest Revenue $2,160

March 31, 2019: Interest Receivable $1,080 Interest Revenue $1,080

March 31, 2019: Cash $51,240 Notes Receivable $48,000 Interest Receivable $3,240

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Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.
Nadya [2.5K]

Answer:

Purchase  12000 debit

Accounts Payable  12000 credit

--to record purchase--    

Accounts Payable   1200 debit

Returns&Allowance       1200 credit

--to record returned goods--

Purchase  16000 debit

Accounts Payable  16000 credit

--to record purchase--    

Purchase          20000 debit

Accounts Payable  20000 credit

--to record purchase--  

Account Payable    16,000 debit

     Purchase Discount      160 credit

     Cash                        15,840 credit

-to record payment within--

SECOND METHOD:

Purchase  11,760 debit

Accounts Payable  11,760 credit

--to record purchase--    

Accounts Payable   1,176 debit

Returns&Allowance       1,176 credit

--to record returned goods--

Purchase  15,840 debit

Accounts Payable  15,840 credit

--to record purchase--    

Purchase          19,600 debit

Accounts Payable  19,600 credit

--to record purchase--  

Account Payable    16,000 debit

     Cash                        15,840 credit

-to record payment within--

interst expense      216 debit

  account payable         216 credit

--to record interest incurred--

Explanation:

As we use periodic system we calculate the inventory and COGS at the end of the period so we use purchase and returns accounts rather than adjusting inventories in every transactions.

In the second method we use itnerest expense when the discount is loss.

<u><em>interest incurred for the period:</em></u>

(12,000 - 1,200) x 2% = 216

The secodn purchase at the end of the monthcan be paid within discount period therefore, we do not recognize interest expense yet.

3 0
3 years ago
What is demand? In your own word
pav-90 [236]

Answer:

Explanation:

Demand in business is the desire of consumers to purchase goods and services at the given prices.

5 0
3 years ago
Read 2 more answers
Required: Journal entry
lisabon 2012 [21]

Answer:

If a cheque was being issued to settle a account payable, the relevant entry is to debit the accounts payable account to show that the debt is being reduced. You will then credit the cash account to show that cash is being reduced as well because it was used to pay off the debt.

Date                    Account Title                                           Debit               Credit

XX-XX-XXXX     Accounts Payable - Saurya Stores     Rs. 39,000

                           Cash                                                                            Rs. 39,000

7 0
3 years ago
The following information is available for Zetrov Company. The cash budget for March shows an ending bank loan of $19,000 and an
Alja [10]

Answer:

Zetrov Company

Budgeted Balance Sheet for the month of March

Assets

Current assets:

Cash                                     $59,700

Accounts receivable             96,600

Inventory                                27,300   $183,600

Long-term assets:

Equipment                          $82,200

Accumulated depreciation (34,600)    $47,600

Total assets                                         $231,200

Liabilities and Equity:

Current liabilities:

Bank loan payable             $19,000

Accounts payable               90,800

Income tax payable            27,800   $137,600

Equity:

Common stock                 $34,000

Retained earnings             59,600    $93,600

Total liabilities and equity                $231,200

Explanation:

a) Data and Calculations:

Ending Bank Loan = $19,000

Ending cash balance = $59,700

Accounts receivable = $96,600 ($138,000 * 70%)

Accounts payable = $90,800

Ending inventory = $27,300 (780 * $35)

Net income = $49,800

Income tax payable = $27,800

Equipment at cost = $82,200

Accumulated depreciation, beginning $31,800

Depreciation for the month =                   2,800

Accumulated depreciation, ending =  $34,600

Retained earnings, beginning = $9,800

Net income                                  49,800

Retained earnings, ending      $59,600

6 0
2 years ago
Faucet Company reported the following information for 2008: October November December Budgeted sales $620,000 $580,000 $720,000
max2010maxim [7]

Answer:

Cash receipt for the month of November is $600000

Explanation:

The receipt of the cash will be such that the sales made in a particular month will be calculated half in the month of sale and half in the next month. Thus, the cash receipt from the accounts receivables for the month of November will be,

Cash received from the October sales = 620000 * 0.5 = $310000

Cash received from the November sales = 580000 * 0.5 = $290000

Total cash receipt in the month of November will be,

Cash receipt - November = 310000 + 290000

Cash receipt - November = $600000

3 0
3 years ago
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