Reference no: EM132483491
Mosaic Biotechnology began operations in September 2019. The following selected transactions relate to liabilities of the company for September 2019 through March 2020. Mosaic's fiscal year ends on December 31. Its financial statements are issued in April and their accounting policies are based on ASPE.
2019
a) On September 5, opened chequing accounts at PE Bank and negotiated a short-term line of credit of up to $15,000,000 at the bank's prime rate (9.5% at the time). The company will pay no commitment fees.
b) On October 1, borrowed 512 million cash from PE Bank under the line of credit and issued a five-month promissory note. Interest at the rate of 10% was payable at maturity. Management planned to issue 10-year bonds in February to repay the note.
c) Received $2,600 of refundable deposits in December for reusable containers used to transport and store chemical-based products.
d) For the September-December period, gross sales on account totalled $4,100,000 and included the combined QST/GST at the rate of 14.975%.
e) Recorded the adjusting entry for accrued interest.
2020
f) In February, issued $10 million of 10-year bonds at face value and paid the bank loan on the March 1 due date.
g) Half of the storage containers covered by refundable deposits were returned in March. The remaining containers will not be returned.
Required:
Question 1) Prepare the appropriate journal entries for these transactions.
Question 2) Prepare the current and long-term liability sections of the December 31, 2019 balance sheet. Trade accounts payable on that date were $252,000. Provide re-financing related note disclosure also.
Question 3) How would your answer to part 2) change if Mosaic used IFRS as its accounting platform
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