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Income Statement and Balance Sheet

Junior Member
Join Date: Feb 2012
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      02-17-2012, 02:38 PM
Hello everyone,

Could you please help me to record them in income statement and balance sheet?

Trial Balance
10% Debentures Year 99 (issued on 1 January Year95) $200,000
Debenture interest paid $10,000
Suspense $4000
Plant and machinery at costs $200,000

Additional Info
The amount in the Suspense Account relates to the proceeds of sale of old plant and machinery on 1 January Year 97. This plant and machinery cost $10,000 and had a book value of $2,000.

Thank for your help.
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bklynboy's Avatar
Join Date: Oct 2011
Location: NYC
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      02-21-2012, 01:53 PM
I dont have all the information from this post so will make some assumptions. For the debt, I will assume it was issued in 1995 at par. On the date of issue you record:

Debit Cash (Asset) 200,000
Credit LT Debt (Liab) 200,000

As such, annual interest is 20,000 and is paid semi annually. For the interest, 10,000 is the semi annual amount and is recorded as:

Debit Interest Expense (Expense) 10,000
Credit Cash (Asset) 10,000

For the PP&E puurchased, this is recorded at cost as follows:

Debit PP&E (Asset) 200,000
Credit Cash (Asset) 200,000

I cant tell you what the depreciation is as I dont know when it was purchased, what the useful life is and whether there is salvage value so I assume you want the entry at point of purchase.

For the suspense item, there is also not enough information so I will assume you are asking how to record the proceeds received (4,000) assumign a remaining BV of 2,000. The entry is:

Debit Suspense (Asset) 4,000
Credit Realized Gain (Income) 2,000
Credit PP&E (Asset) 2,000

For the PP&E you could also record the removal of the cost (10,000) and accumulated depreciation (8,000) to get the same result. Let me know if this is not the question being asked.
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Junior Member
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      02-23-2012, 02:22 PM
Thank for your clarificaiton. it is the clue for me to move on. Regards;
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