Question Completion:
1. Note payable, long term, $120,000 originating on December 31, 2020. This note will be paid in installments. The first installment of $15,000 is to be paid August 1, 2021.
2. Bonds payable, 5%, $300,000 at December 31, 2020. Annual interest on the bond is paid on January 1, 2021.
3. Bond sinking fund, $60,000; this fund is being accumulated to retire the bonds at maturity.
4. Rent paid in advance for the first quarter of 2021 on a short-term lease, $9,000.
5. Accounts payable, $21,000, due to suppliers in terms ranging from 30 to 60 days.
6. A 3-year, 8%, $60,000 note payable to bank originating on November 1, 2020, requires quarterly interest payments.
7. Year-end bonuses, based upon 2020 reported net income, are estimated to be $45,000 and are payable March 15, 2021.
Answer:
Alexa Corp.
Amount to be recognized on the balance sheet of December 31, 2020 with proper classification:
(a) current assets,
Prepaid Rent $9,000
(b) investments,
Bond sinking fund, $60,000
(c) property, plant, and equipment,
N/A
(d) other assets,
N/A
(e) current liabilities,
Note payable, short-term $15,000
Accounts payable, $21,000
Interest payable $800
Bonuses payable $45,000
(f) long-term liabilities
Note payable, long term, $105,000
Bonds payable, 5%, $300,000
8% Note payable, long-term $60,000
Step-by-step explanation:
a) Data and Analysis:
1. Note payable, long term, $105,000 Note payable, short-term $15,000
2. Bonds payable, 5%, $300,000 (Long-term)
3. Bond sinking fund, $60,000 (long-term)
4. Prepaid Rent $9,000
5. Accounts payable, $21,000 (short-term)
6. 8% Note payable, long-term $60,000 Interest payable $800 ($60,000 * 8% * 2/12)
7. Bonuses payable $45,000 (short-term)