On September 1s* the company borrows $1,000,000 from a local bank for nine months. A note is signed with principal and 3% interest to be paid when the note matures next year. A note payable was recognized on September 1st and no other entries regarding this transaction were made until December 31st. In the adjusting entry recorded on 11. $ December 31st determine the amount of interest expense that should be reported. 12. What effect would failure to record the adjusting entry for this note payable have on the financial statement items? A. would cause it to be overstated B. would cause it to be understated C. would have no effect Assets Liabilities Stockholders' Equity Revenue Expenses Net income

On September 1s* the company borrows $1,000,000 from a local bank for nine months. A note is signed with principal and 3% interest to be paid when the note matures next year. A note payable was recognized on September 1st and no other entries regarding this transaction were made until December 31st. In the adjusting entry recorded on 11. $ December 31st determine the amount of interest expense that should be reported. 12. What effect would failure to record the adjusting entry for this note payable have on the financial statement items? A. would cause it to be overstated B. would cause it to be understated C. would have no effect Assets Liabilities Stockholders' Equity Revenue Expenses Net income

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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Allowance for Doubtful Accounts has a debit balance of $766 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $15,294. Which of the following entries records the proper adjusting entry for bad debt expense? a.debit Bad Debt Expense, $14,528 credit Allowance for Doubtful Accounts, $14,528 b.debit Bad Debt Expense, $766 credit Allowance for Doubtful Accounts, $766 c.debit Allowance for Doubtful Accounts, $15,294 credit Bad Debt Expense, $15,294 d.debit Bad Debt Expense, $16,060 credit Allowance for Doubtful Accounts, $16,060
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Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates that the estimated amount of uncollectible accounts is $16,000. Based on the estimate, which of the following adjusting entries should be made? a.debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800 b.debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800 c.debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800 d.debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200
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