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Question
On May 1, 2015, a company lends $100,000 to one of its main suppliers and accepts a 12-month, 6% note. Record the acceptance of the note on May 1, 2015, the adjustment on December 31, 2015, and the cash collection on May 1, 2016.
Answer
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General Investment Co. (GIC) purchased bonds on January 1, 2015. GIC's accountant has projected the following amortization schedule from purchase until maturity: Date
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Carrying Value 1/1/15 $194,758 6/30/15
$7,000
$7,790
$790
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When using the equity method to account for an investment, cash dividends received by the investor from the investee should be recorded:
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_____ A series of equal periodic payments.
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790 Income Statement Data Sales
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77 Tax Expense
32 Net Income
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23 Notes Payable (difference)
557.32 Cash (monthly payment) 704.55 (to record the second monthly payment)
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00 Notes Payable (difference)
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