Question

The unadjusted trial balance of the Manufacturing Equitable atDecember 31, 2018, the end of its fiscal year, included thefollowing account balances. Manufacturing’s 2018 financialstatements were issued on April 1, 2019. Accounts receivable $102,500 Accounts payable 39,400 Bank notes payable 614,000 Mortgagenote payable 1,294,000 Other information: The bank notes, issuedAugust 1, 2018, are due on July 31, 2019, and pay interest at arate of 12%, payable at maturity. The mortgage note is due on March1, 2019. Interest at 11% has been paid up to December 31 (assume11% is a realistic rate). Manufacturing intended at December 31,2018, to refinance the note on its due date with a new 10-yearmortgage note. In fact, on March 1, Manufacturing paid $272,000 incash on the principal balance and refinanced the remaining$1,022,000. Included in the accounts receivable balance at December31, 2018, were two subsidiary accounts that had been overpaid andhad credit balances totaling $19,750. The accounts were of twomajor customers who were expected to order more merchandise fromManufacturing and apply the overpayments to those future purchases.On November 1, 2018, Manufacturing rented a portion of its factoryto a tenant for $33,600 per year, payable in advance. The paymentfor the 12 months ended October 31, 2019, was received as requiredand was credited to rent revenue. Required: 1. Prepare anynecessary adjusting journal entries at December 31, 2018,pertaining to each item of other information (a–d). 2. Prepare thecurrent and long-term liability sections of the December 31, 2018,balance sheet.