Compute interest expense for the quarter

Assignment Help Accounting Basics

Reference no: EM132225778 , Length: word count:250

Assignment -

Getting Started: Set up a spreadsheet using the format on page 123 of your textbook. Use the following accounts as column headings:

Transaction (Ref in lieu of date)
Assets: Cash, Prepaid Expenses, Building, A. Depr.*, & Land.
Liabilities: Accrued Expenses, Notes Payable
Equity: Capital & Retained Earnings
Revenue: Rent revenue, Mgt. Fees & Consulting Fees (combine)
Expenses: Salaries, Rent Expense, Utilities Expense, Supplies Expense, Property Taxes, Interest Expense, Donations & Depreciation Expense

Accumulated Depreciation

As your company earns revenues and incurs expenses record them into the appropriate column

1) Record

a) The "Beginning of the Quarter Transactions",

b) The "During the Quarter Transactions",

2) Subtotal the beginning and during the quarter transactions and

3) Then record the "End of Quarter Transactions".

4) Total all columns at completion.

Beginning of the Quarter Transactions:

1. The owner invested $100,000 cash into the business (Company).

2. The business (Company) borrowed $500,000 from a local bank. The loan has an annual interest rate of 6%.

3. The business (Company) purchased $600 of office supplies on credit.

4. Found an investor to invest $150,000 in the Company for a 20% ownership interest.

During the Quarter Transactions:

Record these entries in addition to transactions 1-4 heading in the instructions.

You: Arranged a loan in the amount of 400,000 to acquired existing properties and construct a residential property on one of the pieces of land you intend to acquire

1. Acquired a piece of rental property on Acklen Ave. You purchased the property for $400,000 and allocated $120,000 to the land (double-sized lot) and $200,000 for the building.

2. Received an assessment for annual property taxes of $2,400.

3. Collected management fees of $1,500

4. Received a utility bill for $100

5. Purchased land at Belmont Ave for $60,000 and a house for $240,000.

6. Collected additional management fees of $2,500

7. Collected rent $6,000 rent on your Acklen property (during the quarter).

8. Collected $4,000 rent on Belmont Ave (during the quarter).

9. Paid office rent of $3,000 during the quarter (rent is $3,000 a quarter)

10. Paid for the building of an additional house onto your Acklen property for $200,000 (not put into service yet).

11. Paid your office manager $6,000 in salaries (salary is $2,000 a month).

12. Billed and collected a consulting fee of $10,000.

13. Made a $500 contribution to a local charity on behalf of the Company.

14. Won $200 in an office Super Bowl pool.

End of the Quarter Transactions:

At the end of the quarter, the owners withdrew $10,000 from the business.
During the first quarter, the business consumed $350 of the office supplies purchased at the beginning of the quarter.
Record depreciation expense on the houses/hotels purchased and put into service.

In the first quarter.

At the end of the quarter, record property tax expense (for the quarter).
Compute interest expense for the quarter.

Note: Assume the useful life of the buildings is 20 years Land is not subject to depreciation, as well as building not put into service.

Instructions: Words: 250 words.

Attachment:- Assignment Files.rar

Reference no: EM132225778

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