M4-6 Recording Adjusting Journal Entries [LO 4-2] For each of the following transactions for the Sky Blue Corporation, prepare the adjusting journal entries required on October 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
a. Collected $3,300 rent for the period October 1 to December 31, which was credited to Unearned Revenue on October 1.
b. Paid $1,920 for a two-year insurance premium on October 1 and debited Prepaid Insurance for that amount.
c. Used a machine purchased on October 1 for $51,600. The company estimates annual depreciation of $5,160.
M4-6 Recording Adjusting Journal Entries [LO 4-2] For each of the following transactions for the Sky Blue Corporation, prepare the adjusting journal entries required on October 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
a. Collected $3,300 rent for the period October 1 to December 31, which was credited to Unearned Revenue on October 1.
b. Paid $1,920 for a two-year insurance premium on October 1 and debited Prepaid Insurance for that amount.
c. Used a machine purchased on October 1 for $51,600. The company estimates annual depreciation of $5,160.
Related questions
Blanton Plastics, a household plastic product manufacturer,borrowed $11 million cash on October 1, 2013, to provide workingcapital for year-end production. Blanton issued a four-month, 6%promissory note to L&T Bank under a prearranged short-term lineof credit. Interest on the note was payable at maturity. Eachfirmâs fiscal period is the calendar year. |
| Required: |
| 1. | Prepare the journal entries to record (a) the issuance of thenote by Blanton Plastics and (b) L&T Bankâs receivable onOctober 1, 2013. (If no entry is required for a particulartransaction, select "No journal entry required" in the firstaccount field. Enter your answers in whole dollars.) |
| 2. | Prepare the journal entries by both firms to record allsubsequent events related to the note through January 31, 2014.(If no entry is required for a particular transaction,select "No journal entry required" in the first account field.Enter your answers in whole dollars.) |
| 3. | Suppose the face amount of the note was adjusted to includeinterest (a noninterest-bearing note) and 6% is the bankâs stateddiscount rate. |
| (a) | Prepare the journal entries to record the issuance of thenoninterest-bearing note by Blanton Plastics on October 1, 2013,the adjusting entry at December 31, and payment of the note atmaturity. (If no entry is required for a particulartransaction, select "No journal entry required" in the firstaccount field. Enter your answers in wholedollars.) |
| (b) | What would be the effectiveinterest rate? (Round your answer to 1 decimalplace.) |
