Reference no: EM133036221
Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. FederalWay, Inc., is one of America's most prestigious retailers. Each Christmas season, FederalWay builds up its inventory to meet the needs of Christmas shoppers. A large portion of these Christmas sales are on credit. As a result, FederalWay often collects cash from the sales several months after Christmas. Assume that on November 1 of this year, FederalWay borrowed $5.6 million cash from Third Fifth Bank to meet short-term obligations. FederalWay signed an interest-bearing note and promised to repay the $5.6 million in six months. The annual interest rate was 7%. All interest will accrue and be paid when the note is due in six months. FederalWay's accounting period ends December 31.
Required:
1. Prepare the journal entry to record the note on November 1.
2. Prepare any adjusting entry required at the end of the annual accounting period on December 31.
3. Prepare the journal entry to record payment of the note and interest on the maturity date, April 30.
(For all requirements, If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0).)
Journal Entry Worksheet
Required 1. Record the note on November 1.
Date
|
General Journal
|
Debit
|
Credit
|
November 01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Required 2. Record the adjusting entry for interest at the end of the annual accounting period.
Date
|
General Journal
|
Debit
|
Credit
|
December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Required 3. Record the payment of the note and interest on the maturity date.
Date
|
General Journal
|
Debit
|
Credit
|
April 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daily random demand for vehicles
: The Padrosa company rents its vehicles to the public at a rate of €120 per day; each contract lasts for exactly one day.
|
Does the overabundance of accessible information
: Explain if polls are an accurate assessment of public opinion. Cite a recent poll to support your claim. How can polls sway public opinion?
|
Case study-kieso company
: Kieso Company borrowed $680,000 for five months. The annual interest rate on the loan was 13%. Kieso's fiscal year ends on December 31.
|
What is the clinic contribution margin on the contract
: Grandview Clinic has fixed costs of $2 million and an average variable cost rate of $15 per visit. What is the clinic contribution margin on the contract
|
Annual accounting period on december
: Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable.
|
What will the share sell for three years
: Electrics Inc. pays a constant dividend of $2 every year. What will the share sell for three years from now if the required rate of return is 9.0%
|
Prepare a bank reconciliation for Queen Company for June
: Question - Using the following information, prepare a bank reconciliation for Queen Company for June 30, 2017. The bank statement balance is $7,950
|
What is the initial cost of the investment
: The bonds are quoted on December 31, 2019, 2020, and 2021, at 95, 99 and 91, respectively. What is the initial cost of the investment
|
Share how you can promote social justice
: Consider your practice education experiences in this first term of the Foundation Practicum and Review the readings in this unit and share how your practicum
|