Prepare the journal entries to record

Ceneplex Theatre has the following obligations at December 31:

(a) a note payable for $100,000 due in two years,

(b) a ten-year mortgage payable of $200,000 payable in ten $20,000 annual payments,

(c) interest payable of $15,000 on the mortgage, and

(d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability.

Banderas Spa borrows $60,000 on July 1 from the bank by signing a $60,000, 10 percent, one-year note payable. Prepare the journal entries to record

(a) the proceeds of the note and (b) accrued interest at December 31, assuming adjusting entries are made only at the end of the year.

Presented below are two independent transactions.

(a) Raja Restaurant accepted a VISA card in payment of a $200 lunch bill. The bank charges a 3 percent fee. What entry should Raja make?

(b) Wendy Company sold its accounts receivable of $80,000. What entry should Wendy make, given a service charge of 3 percent on the amount of receivables sold?

Solution:

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