50.1K

Verified Solution

Link Copied!

Exercise 7-14 a-e

By December 31, 2020, Clearing Corp. had performed a significant amount of environmental consulting services for Rank Ltd. Rank was short of cash, and Clearing agreed to accept a $200,000, noninterest-bearing note due December 31, 2022, as payment in full. Rank is a bit of a credit risk and typically borrows funds at a rate of 12%. Clearing is much more creditworthy and has various lines of credit at 9%. Clearing Corp. reports under IFRS. The tables in this problem are to be used as a reference for this problem.

a. Prepare the journal entry to record the transaction on December 31, 2020, for Clearing Corp. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title
enter an account title

b. Assuming Clearings fiscal year end is December 31, prepare the journal entry required at December 31, 2021. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title
enter an account title

c. Assuming Clearings fiscal year end is December 31, prepare the journal entry required at December 31, 2022. (Round answers to 0 decimal places, e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title to record interest income
enter an account title to record interest income
(To record interest income)
enter an account title to record maturity
enter an account title to record maturity
(To record maturity)

d.

What are the amount and classification of the note on Clearing Corp.s statement of financial position as at December 31, 2021? (Round answer to 0 decimal places, e.g. 58,971.)

The balance of the note at December 31, 2021

Answer & Explanation Solved by verified expert

See Answer