Crane-on Ltd. sells rock-climbing products and operates an indoor climbing facility for climbing enthusiasts. On July 1, 2021, Crane- on received a three-month $22,000 bank loan from City Credit Union due on September 30, 2021, and bearing interest at 3%. Interest is payable at maturity. The company records adjusting entries annually at its year end, December 31. During the next four months, Crane-on incurred the following: Purchased inventory on account for $17,000 from Black Diamond, terms n/30. The company uses a perpetual inventory system. Sept. 1 30 Repaid the $22,000 bank loan payable to City Credit Union (see opening balance), as well as any interest owed. Issued a six-month, 4%, $17,000 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on the first of each month. Oct. 1 2 Borrowed $20,000 cash from Montpelier Bank for 12 months at 3% to finance the building of a new climbing area for advanced climbers. Interest is payable monthly on the first of each month with the principal due in 12 months. Nov. 1 Paid interest on the Black Diamond note and Montpelier Bank loan. Dec. 1 Paid interest on the Black Diamond note and Montpelier Bank loan. Received a $34,000 loan from Atlantic Bank for 12 months at 3% to help pay for a vehicle. Interest is payable quarterly, at the end of each quarter. 31 Recorded accrued interest for the Black Diamond note and the Montpelier and Atlantic loans.

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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Crane-on Ltd. sells rock-climbing products and operates an indoor climbing facility for climbing enthusiasts. On July 1, 2021, Crane-on received a three-month $22,000 bank loan from City Credit Union due on September 30, 2021, and bearing interest at 3%. Interest is payable at maturity. The company records adjusting entries annually at its year end, December 31. During the next four months, Crane-on incurred the following: Sept. 1 Purchased inventory on account for $17,000 from Black Diamond, terms n/30. The company uses a perpetual inventory system. 30 Repaid the $22,000 bank loan payable to City Credit Union (see opening balance), as well as any interest owed. Oct. 1 Issued a six-month, 4%, $17,000 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on the first of each month. 2 Borrowed $20,000 cash from Montpelier Bank for 12 months at 3% to finance the building of a new climbing area for advanced climbers. Interest is payable monthly on the first of each month with the principal due in 12 months. Nov. 1 Paid interest on the Black Diamond note and Montpelier Bank loan. Dec. 1 Paid interest on the Black Diamond note and Montpelier Bank loan. 3 Received a $34,000 loan from Atlantic Bank for 12 months at 3% to help pay for a vehicle. Interest is payable quarterly, at the end of each quarter. 31 Recorded accrued interest for the Black Diamond note and the Montpelier and Atlantic loans. Open T accounts for the Interest Expense, Interest Payable, Bank Loan Payable, and Notes Payable accounts and enter any opening balances. Post the above entries. (Round answers to the nearest whole dollar, e.g. 5,275. Post entries in the order of journal entries presented in the previous part. If the balance is zero (0), select date from drop down and enter 0 for the amounts.)

Open Taccounts for the Interest Expense, Interest Payable, Bank Loan Payable, and Notes Payable accounts and enter any
opening balances. Post the above entries. (Round answers to the nearest whole dollar, eg. 5,275. Post entries in the order of journal
entries presented in the previous part. If the balance is zero (0), select date from drop down and enter O for the amounts.)
Interest Expense
Seot. 30
165
Nov. 1
57
Nov. 1
50
Dec. 1
57
50
Dec. 1
Dec. 31
192
Dec. 31
Dec. 31 Bal.
571
Interest Payable
Dec. 31
192
Dec. 31
Dec. 31 Bal.
192
Notes Payable
Oct 1
17000
Dec. 31 Bal.
17000
Bank Loan Payable
Sept. 30
22000
Oct 2
20000
Dec. 3
34000
Dec. 31 Bal.
32000

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