## (solution) Illustration (Zero-Interest-Bearing Note): On March 1, Landscape

This homework question is regarding current liabilities in ACCOUNTING 310

The homework is on the attachments along with an example.

Illustration (Zero-Interest-Bearing Note): On March 1, Landscape issues

[sells] a \$102,000, four-month [due July 1], zero-interest-bearing note to Castle

National Bank. The present value of the note is \$100,000. Landscape if market

rate = 6%; records this transaction as follows.

Excel 1

1-Mar

Note :

\$

Rate/APR

term-months

Simple interest

Discounted for interst \$

Simple interest \$

Straight line interest \$ JE 102,000

6%

4 = Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest 100,000 without Present value calculation

2,000

500 per month 1-Mar

\$ Cash

Notes payable

Discount on Notes [contra liability] JE 0.50%

per month DR

100,000 \$ CR 2,000 \$ 30-Jun DR Interest expense

Discount on Notes [contra liability] 102,000 CR \$ 2,000

\$ 2,000 Balance = -0- JE 1-Jul

Notes payable

Cash DR

102,000 \$ CR

\$ 102,000 Excel 2 Note :

\$

Rate/APR

term-months Rate: 81,000

8.000%

12 = 0.6666667%

per month 8.00%

+RATE(1,81000,-75000,) Simple interest

Oct. 1 - Borrowed \$75,000 from the Shore Bank by

Discounted for interst \$

75,000 without Present value calculation

signing a Simple interest \$ zero-interest-bearing \$81,000

12-month, 6,000

Straight line interest \$

500 per month

note. [to 12/31] JE 10/1/2xx2 DR Cash \$

Notes payable

Discount on Notes [contra liability] JE 12/31/2xx2 CR

75,000

\$ \$ DR 8%

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

Not discounted // Simple interest

75000 Not discounted // Simple interest

Not discounted // Simple interest CR Interest expense

Discount on Notes [contra liability] \$ Discount on Notes [contra liability] JE 81,000 6,000 3 months = 1/4 yr Excel Rate function three of 12 months 1,500 Balance = \$4500 \$ 1,500 \$ 76,500 10/1/2xx3 assumimg no other entries during 2013

Interest expense

\$

Discount on Notes [contra liability]

Notes payable

\$

Cash

Discount on Notes [contra liability]

Balance = -0- DR CR

4,500

\$ 4,500 \$ \$ 81,000 81,000 81,000 BE13-5: Sports Pro Magazine sold 12,000 annual subscriptions on

August 1, 2xx2, for \$18 each. Prepare Sports Pro?s August 1, 2xx2, journal entry

and the December 31, 2xx2, annual adjusting entry. Monthly issues staring Sept.1. No sales tax

Excel 3

Subscriptions

each \$

Total

\$

Normal: ??? 1-Aug \$

08/30/12

09/30/12

10/31/12

11/30/12

12/31/12

01/31/13 12000

18.00

216,000

Debit

(Credit)

Cash

216,000

0

0

0

0

0

0 Credit

(Debit)

Sales

0

0

\$18,000

\$18,000

\$18,000

\$18,000

\$18,000 Credit

(Debit)

Unearned revenue

\$

216,000 CR

0

\$

(18,000) DR

\$

(18,000)

\$

(18,000)

\$

(18,000) YE

\$

(18,000) 02/28/13

03/31/13

04/30/13

05/31/13

06/30/13

07/31/13

08/31/13

\$

August JE Dec. JE Dec JE 8/1/2012

Cash

\$

Unearned revenue 12 12/31/20

Unearned revenue

Sales \$ Dr

216,000 \$18,000

\$18,000

\$18,000

\$18,000

\$18,000

\$18,000

\$18,000

216,000 \$ \$

\$

\$

\$

\$

\$

\$

\$ (18,000)

(18,000)

(18,000)

(18,000)

(18,000)

(18,000)

(18,000)

- Excel 3 CR

\$ 216,000 Dr

72,000 CR

\$ 13 12/31/20

Sales

Sales 0

0

0

0

0

0

0

216,000 \$ 4 months

72,000 Dr

144,000 CR

\$ 8 months

last mo. = August 144,000 Wage payable Excel 4 Payroll is paid on Tuesday for wages earned through the prior week Wednesday

The months ends on Monday

Each workday costs the the company in wages:

\$5,300

Workdays are M-T-W-Th-F -- 5 days per week

Workdays owed to employees

Amount owed to employees \$

The Account balance in Wage payable prior to this adjusting JE is \$

Month end JE

Wages expense

Wages payable [ Accrued wages] PV of Contigency Dismatling &amp; removal \$

Years

Rate \$ pay

work

vacation

holidays 8 work

pay 42,400.00

4,650.00

Dr Cr

37,750.00

\$ work

Vac.Hol 37,750.00 Excel 5 1,000,000

5

10% Present Value Cash flow

1

0

2

0

3

0

4

0

5 \$

1,000,000 Table \$

\$

\$

\$

\$ 620,921.32

\$620,921.32 \$ 620,921.32

=+NPV(D130,D133:D137)

Imputed Interest Interest: rate X beginning BV

1

2

3

4

5 \$379,078.68 \$ 1,000,000 Interest Expense = Dr.

\$

\$

62,092.13 CR. Asset retirement obligation

\$

\$

68,301.35 CR. Asset retirement obligation

\$

\$

75,131.48 CR. Asset retirement obligation

\$

\$

82,644.63 CR. Asset retirement obligation

90,909.09 CR. Asset retirement obligation

\$1,000,000.00 \$ Asset retirement liability = \$ \$620,921.32

683,013.46

751,314.80

826,446.28

909,090.91 \$

379,078.68

1,000,000 by end year 5 \$50 hr

40

3 weeks

2 weeks 10 47 weeks

52 weeks \$94,000

\$10,000

10.64% 10K/\$p4K

Ea. Work week \$ 212.77 \$10K / 47

Dr. Benefit expense [ or Wage expnse]

Cr. Accrued benefits [ ior vacation / holiday] IBM

Liabilities &amp; Shareholders' Equity

2009

ST Debt &amp; Current Portion LT Debt

Short Term Debt

Current Portion of Long Term Debt

Accounts Payable

Income Tax Payable

Other Current Liabilities

Dividends Payable

Accrued Payroll

Miscellaneous Current Liabilities

Total Current Liabilities 4.17B

1.95B

2.22B

7.44B

3.83B

20.57B

4.51B

16.07B

36B \$ billions 2010

6.78B

2.76B

4.02B

7.8B

4.22B

21.76B

5.03B

16.74B

40.56B 2011

8.46B

4.16B

4.31B

8.52B

3.31B

21.83B

5.1B

16.73B

42.12B 2012

9.18B

3.59B

5.59B

7.95B

4.95B

21.54B

4.75B

16.8B

43.63B 2014

9.31B

0

9.31B

6.87B

2.25B

22.64B

3.66B

18.97B

41.06B 5-year

trend ACC 310

HCT

HW

Ch.13

Current Liabilities A.

On December 31, 2012,ClassCo had \$25,000,000 of short-term debt in the form of its notes payable on June 12, 2013.

ClassCo had in place @ 12/31/12 provisions to issue \$10,000,000 of stock to settle some of that debt; ClassCo had a

firm commitment from Big Bank to close on February 1, 2013 a bank loan for \$11,000,000 to be repaid on 11/20/2012

and to use those proceeds to retire some of he \$25illion debt and had a firm commitment from Bank2 to close on

Jan26 2013 for \$5,000,000 of long term Note payable in full on 7/1/2015.

If ClassCo has no other debt how Should Current &amp; Long term Debt be show on the Balance Sheet of !2/31/2012 B

ClassC0 signed a \$100,000 Zero-face rate Note with Big Bank on 10/31/2012 payable TEN MONTHS FROM THAT DATE;

the imputed interest was 12%.

What was the Current liability for this note at 12/31/2012

Explain or show calculations as to how answer determined C

ClassCo sold 1200 subscription to its theater series

each purchaser can attend 1 show per month

series runs for 6 months beginning April &amp; ending September

Show is last Thursday of each month

a subscription is \$300 each

Subscription were sold &amp; paid for 1/4 in each month of JAN_FEB_MAR_APril

Complete the Table

Sales or

Debit

Revenue

to Cash

credited

in Month in the Month

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct ME Balance

Unearned

Revenue

Solution details:

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Approved

Sep 13, 2020

EXPERT

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