Question

Long-Term Liabilities 785 Which sce > Exercises Acme bonds payable are amortiged using the straight-line amortigation wthod unless stated otherwise. E14-18 Accounting for long-term notes payable transactions Consider the following note payable transactions of Caleb Video Productions. Learning Objective 1 alty issues nually 2. Total Liabilities 565,280 David feels If David is 2018 Oct.1 Purchased equipment costing $80,000 by issuing a fiveyear, 8% note payable. The note requires annual principal payments of $16,000 plus interest each October 1. Dec. 31 Accrued interest on the note payable. 2019 Oct. 1 Paid the first installment on the note. Dec. 31 Accrued interest on the note payable. sucs mually. The Requirements 1. Journalize the transactions for the company, 2. Considering the given transactions only, what are Caleb Video Productions' total liabilities on December 31, 2019? ethod for

Answer 1

Credit Debit 80,000 80,000 1,600 1,600 Requirement 1 Date Accounts and Explanation Oct 01, 2018 Equipment 8% Notes payable (To record equipment purchased by issuing 8% Notes payable) Dec 31, 2018 Interest expense ($80,000 X 8% X 3/12) Interest payable (To record accrued interest on notes payable) Oct 01, 2019 Interest expense $80,000 X 8% X 9/12) Interest payable (On Dec 31, 2018) 8% Notes payable (Annual principal payment) Cash (To record the payment of annual payment of principal and interest expense) Dec 31, 2019 Interest expense (($80,000 - 16,000 X 8% X 3/12) Interest payable (To record accrued interest on notes payable) 4,800 1,600 16,000 22,400 1,280 1,280 Requirement 2 Caleb Video Production Total Liabilities On December 31, 2019 Non Current liabilties: 8% Notes payable ($80,000 - $16,000) $ 64,000 Current liabilties: Interest payable Total Liabilities 1,280 65,280 $