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1.) How much is adjusted Interest Expense on December 31, 2021?

1.) How much is adjusted Interest Expense on December 31, 2021?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1.) How much is adjusted Interest Expense on December 31, 2021?

Cotton's Laundry Services For the year ended December 31, 2021 Trial Balance 5,087,000 265,000 Cash Accounts Receivable Allowance for Bad Debts 12,000 Notes Receivable 587,000 70,000 270,000 Office Supplies Prepaid Rent Prepaid Insurance Equipment Accumulated Depreciation - Eqpt 516,000 573,000 105,000 Land 5,000,000 Accounts Payable 2.5% Notes Payable Cotton, Capital Cotton, Drawing 527,000 1,500,000 9,960,000 200,000 Service Income 853,000 Supplies Expense Rent Expense Utilities Expense 30,000 270,000 89,000 12,957,000 12,957,000
Transcribed Image Text:Cotton's Laundry Services For the year ended December 31, 2021 Trial Balance 5,087,000 265,000 Cash Accounts Receivable Allowance for Bad Debts 12,000 Notes Receivable 587,000 70,000 270,000 Office Supplies Prepaid Rent Prepaid Insurance Equipment Accumulated Depreciation - Eqpt 516,000 573,000 105,000 Land 5,000,000 Accounts Payable 2.5% Notes Payable Cotton, Capital Cotton, Drawing 527,000 1,500,000 9,960,000 200,000 Service Income 853,000 Supplies Expense Rent Expense Utilities Expense 30,000 270,000 89,000 12,957,000 12,957,000
The following transactions refer to Cotton's Laundry Services: A. Cotton serviced for P75,000, on account. She mistakenly recorded the promise to pay as 57,000 to Notes Receivable. B. The Notes payable was issued on 3/1/20, payable after 2 years. C. Notes receivable was received on 10/1/21 and is payable semi-annually for the next 2 years. Interest rate was twice of the Notes payable. D. Supplies amounted to P100,000 on 1/1/21. 69% of total Supplies were used at year-end. No purchases of supplies were made during the year. E. Cotton is under a 2-year rent contract amounting to P720,000 since 1/1/2021. She will pay P180,000 at the end of every quarter, starting March 31, 2021, until the full price is paid. Cotton's last record related to this transaction was on September 30, 2021. F. Cotton availed a 4-year P576,000 fire insurance last 8/1/20. G. Equipment was purchased on 6/1/20. It is estimated that it could be sold for P123,000 at the end of its useful life. H. Cotton failed to record a P300,000 service that she rendered. As of 12/31/21, only 80% of this balance has been collected. (Collections related to this transaction were not recorded as well) I. For 2021, Cotton started off with 4 employees with monthly salaries of P15,000 each. After 3 months, she hired an additional 3 employees with a payment cut-off salary of P10,000. Payment of salaries is made every 15th and last day of the month. J. 5% of total Accounts Receivable is expected to be uncollectible.
Transcribed Image Text:The following transactions refer to Cotton's Laundry Services: A. Cotton serviced for P75,000, on account. She mistakenly recorded the promise to pay as 57,000 to Notes Receivable. B. The Notes payable was issued on 3/1/20, payable after 2 years. C. Notes receivable was received on 10/1/21 and is payable semi-annually for the next 2 years. Interest rate was twice of the Notes payable. D. Supplies amounted to P100,000 on 1/1/21. 69% of total Supplies were used at year-end. No purchases of supplies were made during the year. E. Cotton is under a 2-year rent contract amounting to P720,000 since 1/1/2021. She will pay P180,000 at the end of every quarter, starting March 31, 2021, until the full price is paid. Cotton's last record related to this transaction was on September 30, 2021. F. Cotton availed a 4-year P576,000 fire insurance last 8/1/20. G. Equipment was purchased on 6/1/20. It is estimated that it could be sold for P123,000 at the end of its useful life. H. Cotton failed to record a P300,000 service that she rendered. As of 12/31/21, only 80% of this balance has been collected. (Collections related to this transaction were not recorded as well) I. For 2021, Cotton started off with 4 employees with monthly salaries of P15,000 each. After 3 months, she hired an additional 3 employees with a payment cut-off salary of P10,000. Payment of salaries is made every 15th and last day of the month. J. 5% of total Accounts Receivable is expected to be uncollectible.
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