You are auditing the balance sheet section of a client\'s balance sheet as of 12

Question

You are auditing the balance sheet section of a client's balance sheet as of 12/31/2010. You see that there is a $1,000,000 long-term debt outstanding to Sturdy Savings Bank which is due on 12/15/2015. You read the loan agreement and see that there is an acceleration clause (research this term). The clause reads that the borrower cannot borrow more than $10,000 from any other entity during the term of the $1,000,000 without prior approval of Sturdy Savings Bank. If your client violates this clause, the $1,000,000 becomes due and payable upon demand of the lender. Assume that you client had violated the acceleration clause on 11/1/2010. Discuss how you would handle this situation and how it might affect your client's financial statements for the year ended 12/31/10.

Explanation / Answer

Ruggiero Co. sold merchandise on account to Edwards for $8,000, terms n/30. On February 9, Edwards gave Ruggiero Co. a 7% promissory note in settlement of this account. Prepare the journal entry to record the sale and the settlement of the accounts receivable.

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.