Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
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Chapter 10, Problem 1E
Determining Financial Statement Effects of Transactions Involving Notes Payable
Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mattel builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mattel’s sales are on credit. As a result, Mattel often collects cash from its sales several months after Christmas. Assume on November 1, 2018, Mattel borrowed $6 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 8.0 percent payable at maturity. The accounting period ends December 31.
Required:
- 1. Indicate the accounts, amounts, and effects (+ for increase, − for decrease, and NE for no effect) of the (a) issuance of the note on November 1; (b) impact of the
adjusting entry on December 31, 2018; and (c) the payment of the note and interest on April 30, 2019, on theaccounting equation. Use the following structure for your answer:
- 2. If Mattel needs extra cash prior to every Christmas season, should management borrow money on a long-term basis to avoid negotiating a new short-term loan each year? Explain your answer.
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The following information relates to Sunland Limited's Cash account. The reconciled cash balance from June's bank reconciliation is
$25,100. During the month of July, Sunland recorded cash receipts of $28,260 and cash payments of $15,670 in the general ledger
Cash account. At July 31, Sunland Limited had an reconciled cash balance of $37,690. An examination of the company's July bank
statement shows a balance of $19,547 on July 31; outstanding cheques $3,917; deposits in transit $1,737; EFT collections on account
that were not yet recorded on the books $2,189; NSF cheque $1,251; NSF fee $69; and bank service charges $109.
Prepare the necessary journal entries required on July 31 for Sunland. (List all debit entries before credit entries. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and
enter O for the amounts.)
Date
Account…
Bank Reconciliation
Zing Corp. prepares monthly bank reconciliations as part of its cash controls. Zing's bank provided the following about Zing's cash balance at the bank for the month of April 2022:
Balance, April 30, 2022
$74,350
Service charge for April
75
Note ($3,000) and interest ($90) collected for Zing from a customer
3,090
Interest earned during April
140
NSF cheque from Orange Corp. (deposited by Zing) for goods purchased on account
470
Zing then analyzed its cash balance on its own set of books, revealing the following details:
Chequing account balance per Zing’s books
$72,329
Deposit in transit at April 30
2,100
Outstanding cheques as of April 30
1,400
Error in recording a cheque issued by Zing (Correct amount of the cheque is $737, but was recorded as a cash disbursement of $773. The cheque was issued to pay for merchandise originally purchased on account.)
36
Required:
1. Prepare a bank reconciliation at April 30, 2022, in proper form.…
ed
Softee Sodas and Patterson Beverage Company are two of the largest and most successful beverage companies in the world in terms
of the products that they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider
the following rounded amounts reported in their annual reports (amounts in millions).
Fiscal Year Ended:
Net Sales
Accounts Receivable
Allowance for Doubtful Accounts
Accounts Receivable, Net of Allowance
2018
$ 35,660
4,130
550
3,580
Softee Sodas
2017
$ 39,520
4,390
540
3,850
Patterson Beverage Company
2016
$ 44,440
4,580
530
4,050
2018
$ 71,440
7,680
100
7,580
2017
$ 72,120
7,590
130
2016
$ 66,660
7,250
140
7,460
7,110
Required:
1. Calculate the receivables turnover ratios and days to collect for Softee Sodas and Patterson Beverage Company for 2018 and 2017.
2-a. Which of the companies was quicker to convert its receivables into cash in 2018?
2-b. Which of the companies was quicker to convert its receivables into cash…
Chapter 10 Solutions
Fundamentals Of Financial Accounting
Ch. 10 - Prob. 1QCh. 10 - Prob. 2QCh. 10 - What three factors influence the dollar amount...Ch. 10 - Prob. 4QCh. 10 - Why is Deferred Revenue considered a liability?Ch. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - If a company has a long-term loan that has only...Ch. 10 - What are the reasons that some bonds are issued at...Ch. 10 - Prob. 10Q
Ch. 10 - Will the stated interest rate be higher than the...Ch. 10 - What is the carrying value of a bond payable?Ch. 10 - What is the difference between a secured bond and...Ch. 10 - Prob. 14QCh. 10 - Prob. 15QCh. 10 - Prob. 16QCh. 10 - Prob. 17QCh. 10 - (Supplement D) Over the period to maturity, why...Ch. 10 - Which of the following best describes Accrued...Ch. 10 - Prob. 2MCCh. 10 - Prob. 3MCCh. 10 - Prob. 4MCCh. 10 - Which of the following does not impact the...Ch. 10 - Which of the following is false when a bond is...Ch. 10 - To determine if a bond will be issued at a...Ch. 10 - A bond is issued at a price of 103 and retired...Ch. 10 - In a recent year. Land O Lakes, Inc., reported (in...Ch. 10 - Prob. 10MCCh. 10 - Recording Unearned Revenues A local theater...Ch. 10 - Prob. 2MECh. 10 - Prob. 3MECh. 10 - Reporting Payroll Tax Liabilities Refer to M10-3....Ch. 10 - Reporting Current and Noncurrent Portions of...Ch. 10 - Recording a Note Payable Greener Pastures...Ch. 10 - Reporting Interest and Long-Term Debt, Including...Ch. 10 - On February 6, 2017, the NYSE bond directory...Ch. 10 - E-Tech Initiatives Limited plans to issue...Ch. 10 - Repeat M10-9 assuming the bonds are issued at...Ch. 10 - Recording Bonds Issued at Face Value Schlitterbahn...Ch. 10 - Prob. 12MECh. 10 - Computing the Debt-to-Assets Ratio and the Times...Ch. 10 - Analyzing the Impact of Transactions on the...Ch. 10 - Prob. 15MECh. 10 - Prob. 16MECh. 10 - Prob. 17MECh. 10 - Prob. 18MECh. 10 - Prob. 19MECh. 10 - Prob. 20MECh. 10 - Prob. 21MECh. 10 - Determining Financial Statement Effects of...Ch. 10 - Recording a Note Payable through Its Time to...Ch. 10 - Recording Payroll Costs McLoyd Company completed...Ch. 10 - Recording Payroll Costs with and without...Ch. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Preparing Journal Entries to Record Issuance of...Ch. 10 - Preparing Journal Entries to Record Issuance of...Ch. 10 - Prob. 9ECh. 10 - Calculating and Interpreting the Debt-to-Assets...Ch. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 14ECh. 10 - (Supplement 10B) Recording the Effects of a...Ch. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Determining Financial Effects of Transactions...Ch. 10 - Recording and Reporting Current Liabilities with...Ch. 10 - Recording and Reporting Current Liabilities...Ch. 10 - Comparing Bonds Issued at Par, Discount, and...Ch. 10 - Determining Financial Statement Reporting of...Ch. 10 - Prob. 6CPCh. 10 - Prob. 7CPCh. 10 - Prob. 8CPCh. 10 - Prob. 9CPCh. 10 - Prob. 10CPCh. 10 - Determining Financial Effects of Transactions...Ch. 10 - Recording and Reporting Current Liabilities with...Ch. 10 - Recording and Reporting Current Liabilities...Ch. 10 - Comparing Bonds Issued at Par, Discount, and...Ch. 10 - Prob. 5PACh. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PACh. 10 - Prob. 1PBCh. 10 - Recording and Reporting Current Liabilities with...Ch. 10 - Prob. 3PBCh. 10 - Prob. 4PBCh. 10 - Recording and Explaining the Early Retirement of...Ch. 10 - Prob. 6PBCh. 10 - Prob. 7PBCh. 10 - Prob. 8PBCh. 10 - Zarina Corp. signed a new installment note on...Ch. 10 - Prob. 1COPCh. 10 - Prob. 1SDCCh. 10 - Prob. 2SDCCh. 10 - Prob. 4SDCCh. 10 - Prob. 5SDCCh. 10 - Prob. 6SDCCh. 10 - Prob. 7SDCCh. 10 - Prob. 8SDCCh. 10 - (Supplement 10C) Preparing a Bond Amortization...Ch. 10 - Nicole thinks that her business, Nicole’s Getaway...
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