P11-35 and P13-47 two problem Questions……………….
P11-35 Accounting for liabilities of a known amount
This problem continues the Davis Consulting situation from Problem P10-42 of Chapter 10. Davis Consulting believes the company will need to borrow $300,000 in order to expand operations. Davis consults the bank and secures a 10%, five-year note on March 1, 2014. Davis must pay the bank principal in five equal installments plus interest annually on March 1.
1. Record the $300,000 note payable on March 1, 2014.
2. Record the entry to accrue interest due on the note at December 31, 2014.
3. Record the entry Davis would make to record the payment to the bank on March 1, 2015.
P13-47 Sources of equity and journalizing stock issuance
This problem continues the Davis Consulting, Inc. situation from Problem P11-35 of Chapter 11. Davis decides to raise additional capital for a planned business expansion by issuing 20,000 additional $1 par value common shares for $40,000 and by issuing 3,000, 6%, $80 par preferred shares at $100 per share. Assuming total stockholders’ equity is $18,165 and includes 100 shares of common stock and 0 shares of preferred stock issued and outstanding immediately before the previously described transactions, journalize the entry related to the issuances of both common and preferred shares.
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