For Each of the Following Independent Situations, Prepare the Appropriate

question 62

Essay

For each of the following independent situations, prepare the appropriate adjusting journal entry on the last day of the fiscal year end (FYE). Use the information provided below for each situation.
1 Note executed on July 01, 2012 and FYE is September 30. (92 days)
2 Note executed on April 01, 2012 and FYE is September 30. (6 months)
3 Note executed on October 15, 2012 and FYE is January 31. (108 days)
4 Note executed on January 01, 2012 and FYE is April 30. (4 months)
5 Note executed on September 01, 2012 and FYE is September 30. (30 days)

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Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to service its debt by comparing operating income to interest expense.

Financial Information

Data pertaining to the financial status or performance of an individual, business, or other entity, including reports on assets, liabilities, income, and expenses.

Liquidity and Efficiency

Financial metrics that evaluate how quickly a company can meet its short-term obligations with its available assets and how effectively it utilizes its resources.

Solvency

The ability of an entity to meet its long-term financial obligations and continue its operations in the long term.