Income Statement and Balance Sheet

Discussion in 'General Accountancy Discussion' started by lbuntha, Feb 17, 2012.

  1. lbuntha

    lbuntha

    Joined:
    Feb 11, 2012
    Messages:
    7
    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.
     
    lbuntha, Feb 17, 2012
    #1
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  2. lbuntha

    bklynboy VIP Member

    Joined:
    Oct 12, 2011
    Messages:
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    Location:
    NYC
    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.
     
    bklynboy, Feb 21, 2012
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  3. lbuntha

    lbuntha

    Joined:
    Feb 11, 2012
    Messages:
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    Thank for your clarificaiton. it is the clue for me to move on. Regards;
     
    lbuntha, Feb 23, 2012
    #3
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