Balance Sheet and Annual Interest

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The purpose of this assignment is to help you understand the balance sheet presentation for the liabilities of a company.

Assignment Steps

Resources: Financial Accounting: Tools for Business Decision Making

Prepare a detailed liabilities section of O’Brian’s balance sheet using the following information:

Accounts payable $157,000

Notes payable (due May 1, 2018) $20,000

Bonds payable (due 2021) $900,000

Unearned rent revenue $240,000

Discount on bonds payable $41,000

FICA taxes payable $7,800

Interest payable $40,000

Notes payable (due 2019) $80,000

Income taxes payable $3,500

Sales taxes payable $1,700

Show work on the Week 3 Excel® spreadsheet.

Note: This assignment requires that you only submit an Excel® Workbook file. Use excel formulas to calculate results. There are no written or APA guideline requirements.

Complete in an Excel spreadsheet. Show your work. Use excel formulas to calculate results.

• Problem 10-10A

P10-10A

On January 1, 2017, Lachte Corporation issued $1,800,000 face value, 5%, 10‐year bonds at $1,667,518. This price resulted in an effective‐interest rate of 6% on the bonds. Lachte uses the effective‐interest method to amortize bond premium or discount. The bonds pay annual interest January 1.

Instructions

(Round all computations to the nearest dollar.)

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2017.

(b) Prepare an amortization table through December 31, 2019 (three interest periods) for this bond issue.

(c) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2017.

(c) Interest Expense $100,051

(d) Prepare the journal entry to record the payment of interest on January 1, 2018.

(e) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2018.

Prepare journal entries to record issuance of bonds, payment of interest, and effectiveinterest amortization, and balance sheet presentation.

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