Blake Company Loaned Jiminez Corporation $18,000 on October 1,2016

question 39

Essay

Blake Company loaned Jiminez Corporation $18,000 on October 1,2016.The 8-month note carried a 6% rate of interest.
Required: a)How will Blake report the note and interest on its 2016 income statement,balance sheet,and statement of cash flows?
b)How will Blake report the note and interest on its 2017 income statement and statement of cash flows?

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Definitions:

Finished Goods Inventory

Items in stock that are completed and ready for sale, representing one of the stages in the production inventory.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed manufacturing overhead from product cost calculations.

Net Operating Income

The income generated from normal business operations after deducting operating expenses such as wages and cost of goods sold, excluding income from investments and other non-operational sources.

Variable Costing

An accounting method that only considers variable costs (costs that change with production levels) in product costing and decision-making.