GEN COMBO LL FUNDAMENTALS OF FINANCIAL ACCOUNTING; CONNECT ACCESS CARD

6th Edition

ISBN: 9781260260083

Author: Fred Phillips Associate Professor

Publisher: McGraw-Hill Education

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Textbook Question

Chapter 10, Problem 1E

Determining Financial Statement Effects of Transactions Involving Notes Payable

Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mattel builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mattel’s sales are on credit. As a result, Mattel often collects cash from its sales several months after Christmas. Assume on November 1, 2018, Mattel borrowed $6 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 8.0 percent payable at maturity. The accounting period ends December 31.

Required:

1. Indicate the accounts, amounts, and effects (+ for increase, − for decrease, and NE for no effect) of the (a) issuance of the note on November 1; (b) impact of the adjusting entry on December 31, 2018; and (c) the payment of the note and interest on April 30, 2019, on the accounting equation. Use the following structure for your answer:

Chapter 10, Problem 1E, Determining Financial Statement Effects of Transactions Involving Notes Payable Many businesses

2. If Mattel needs extra cash prior to every Christmas season, should management borrow money on a long-term basis to avoid negotiating a new short-term loan each year? Explain your answer.

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Chapter 10, Problem 21ME

Chapter 10, Problem 2E

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x pg | Hc Ho Le We Bai Ba FA Ma Me Lo Lo | zto.mheducation.com/ext/map/index.html?_con con&external_browser=0&launchUrl=https%253A%252F%252Fconnect.mheducation.com%252Fconnect%252Fltiwr ent 01 k Saved As of December 31, Year 1, Moss Company had total cash of $164,000, notes payable of $86,400, and common stock of $53,200. During Year 2, Moss earned $44,000 of cash revenue, paid $24,000 for cash expenses and paid a $3,800 cash dividend to the stockholders. Required a. Determine the amount of retained earnings as of December 31, Year 1. b. & c. In the accounting equation table, record the beginning account balances, revenue, expense, and dividend events under the appropriate headings of the accounting equation. d. Complete the table below to prove the equality of the accounting equation as of December 21, Year 2.1 e. Identify the beginning and encing balances in the Cash and Common Stock accounts. Enter the effect of each transaction on these accounts tu demonstrate why the beginning and…

Chapter 10 Solutions

GEN COMBO LL FUNDAMENTALS OF FINANCIAL ACCOUNTING; CONNECT ACCESS CARD

Ch. 10 - Prob. 1Q Ch. 10 - Prob. 2Q Ch. 10 - What three factors influence the dollar amount...Ch. 10 - Prob. 4Q Ch. 10 - Why is Deferred Revenue considered a liability?Ch. 10 - Prob. 6Q Ch. 10 - Prob. 7Q Ch. 10 - If a company has a long-term loan that has only...Ch. 10 - What are the reasons that some bonds are issued at...Ch. 10 - Prob. 10Q

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Solution Summary: The author explains the accounting equation effect for the given transactions. Liabilities are claims against the resources that a business owes to outsiders.

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