ACT3391 Intermediate Accounting I - On April 1, 2018, Y borrowed $900,000

ACT 3391 Intermediate Accounting I

TRADITIONAL HOMEWORK ITEMS - FALL 2023 - ACT 3391

General Instructions for the Traditional Homework – refer to the instructions for traditional item no. 1.

4. (5 points) On April 1, 2018, Y borrowed $900,000 at 6%. Y pays interest every 6 months with interest payments every October 1 and April 1. Y will repay $450,000 of the principal on October 1, 2018 and the remainder on April 1, 2019. Assume Y only makes AJEs every December 31 AND does NOT make reversing entries. Prepare the entries Y should make on:

a. April 1, 2018

b. October 1, 2018

c. December 31, 2018

d. April 1, 2019

e. October 1, 2019

5. (2 points) Presented below are selected account balances for C Company as of 12-31-xx:

Cash      $ 400,000

Accounts payable   $ 150,000

Retained earnings    $3,500,000

Sales revenues    $1,900,000

Loss on the sale of a stock investment    $ 5,000

Cost of goods sold    $ 600,000

Selling and administrative expenses   $ 200,000

 Interest expense   $ 20,000

 Income tax expense    $ 250,000

a. Prepare the ONE entry C should make to close out the all of the temporary accounts. Do NOT use an “income summary” account – close the temporary accounts directly into retained earnings.

b. What is C’s retained earnings balance AFTER making the closing entry?

6. (6 points) Zena Company’s financial records showed the following selected items for 2015:

Advertising receipts                  $450,000

Interest paid on borrowings     $ 34,000

Land rental revenues        $560,000

Wage expense                    $300,000

Zena follows the accrual basis of accounting. The following balances were taken from Zena’s balance sheets:

12-31-14 12-31-15 Advertising receivables 28,000 31,000 Prepaid advertising costs 42,000 36,000 Wages payable 30,000 21,000 Interest payable 12,000 8,000 Unearned advertising revenues 40,000 32,000 Unearned land rental revenue 45,000 33,000

a. What were Zena’s advertising revenues for 2015?

b. What was Zena’s interest expense for 2015?

c. How much cash did Zena pay out for wages and salaries during 2015?

d. How much cash did Zena collect for land rentals during 2015? 1