Hines Enterprises Loaned $4,000 to Baldwin Company on October 1

question 46

Essay

Hines Enterprises loaned $4,000 to Baldwin Company on October 1, 2010, for one year at 8% interest.
Required:
Show the effects on the financial statements model (below) of
a) the loan to Baldwin
b) the adjusting entry at December 31, 2010
c) accrual of interest and collection of the note and related interest on October 1, 2011
Indicate dollar amounts of increases and decreases. For cash flows, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element is not affected by an event, indicate with NA.

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Definitions:

Sole Stockholder

A single individual or entity that owns 100% of the shares of a corporation.

Corporate Entity

A corporate entity is a company or group that is authorized to act as a single entity and recognized as such in law, separate from its shareholders.

Promoter

An individual or entity that takes the initiative in founding and organizing a business or enterprise, often before it’s officially established.

Sole Shareholder

An individual or entity that owns 100% of the shares of a corporation, maintaining complete control.