Required: (1) Prepare the necessary journal entries for the above transactions in 2027, including all necessary year-end adjustments. (Indicate clearly when no journal entry is required. Narratives are not required.) (2) Prepare the current and non-current liability sections of the statement of financial position as of December 31, 2027.
Required: (1) Prepare the necessary journal entries for the above transactions in 2027, including all necessary year-end adjustments. (Indicate clearly when no journal entry is required. Narratives are not required.) (2) Prepare the current and non-current liability sections of the statement of financial position as of December 31, 2027.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
Bangladesh Ltd had the following transactions related to liabilities. The company's financial year
ends on Dec 31 and its financial statements are issued on April 30 following the reporting date.
2027
a.
On Oct 1, the company borrowed $1.0 million cash from Mrs. Malta and issued a six-month
promissory note. Interest at 8% on the note was payable at maturity.
b. The company delivered its products to customers in reusable containers. Customers paid a
deposit $50 for each container received and received a refund of the deposit when the
container was returned. During October, the company delivered 3,000 containers to
customers and the customers returned 1,800 containers to the company.
On Nov 5, the company negotiated with Mongolia Bank a short-term line of credit of up to
$2.5 million at the bank's best lending interest rate. No commitment fee was paid by the
company.
C.
d. The products sold by the company carried a one-year warranty against defects. Warranty
cost was estimated to be 5% on total sales $3,000,000.
2028
e.
On Mar 31, the company issued another $1.0 million 10-year note to Mrs. Malta for the
repayment of the note issued on Oct 1, 2027.
Required:
(1) Prepare the necessary journal entries for the above transactions in 2027, including all
necessary year-end adjustments. (Indicate clearly when no journal entry is required.
Narratives are not required.)
(2) Prepare the current and non-current liability sections of the statement of financial position
as of December 31, 2027.
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