QUESTION 3 On 1 January 2022, Rodney Inc. provided services to Smith Co. in exchange for Smith’s $300,000, 2-year 8% note with interest compounded semi-annually on July 1 and January 1. The current market rate of similar notes is 12%. Rodney Inc. financial year ends December 31. REQUIRED: 1. Provide the following input values from your financial calculator: N = Answer 2 I/Y = Answer 12 % PMT = $Answer 12000 FV = $Answer 300000 2. The note was issued at Answer A Discount 3. The present value of the note is $Answer 279 209.37 4. Complete the following amortization schedule: Cash Interest Amortized Carrying Dates Received Income Amount Amount Jan 1, 2022 0 0 0 $Answer 279209.37 Jul 1, 2022 $Answer 12000 $Answer 16752.56 $Answer 4752.56 $Answer 283961.93 Jan 1, 2023 " " $Answer 17037.72 $Answer 5037.72 $Answer 288999.65 Jul 1, 2023 " " $Answer 17339.98 $Answer 5339.98 $Answer 294339.63 Jan 1, 2024 " " $Answer 17660.37 $Answer 5660.37 $Answer 300000 5. Prepare the necessary journal entries for the following dates for Rodney Inc. You may copy and paste from this list: Accounts receivable Discount Premium Bad debt expense Interest income Sales discounts Bank Interest receivable Sales discounts forfeited Cash Inventory Sales returns Cost of Goods Sold Notes receivable Sales revenue COGS Par Service revenue Jan 1, 2022: Dr. Answer $Answer Cr. Answer $Answer Dec 31, 2022: Dr. Answer $Answer Dr. Notes receivable $Answer Cr. Answer $Answer Jan 1, 2023: Dr. Answer $Answer Cr. Answer $Answer
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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