Ninatori Fashion Supply Corp. received $500,000 from one of its banks as proceed

Question

Ninatori Fashion Supply Corp. received $500,000 from one of its banks as proceeds of a short-term loan to cover expected working capital needs and issued a 60-day note bearing 7.25% interest due with the face value at maturity. Ninatori Fashion Supply Corp. paid $808,300 cash to its main bank that included $58,300 for December's interest and $750,000 for the annual principal payment due on its long-term debt. Ninatori Fashion Supply Corp. signed an agreement to lease the 6th floor of its office building to a CPA firm, Benson and Stabler LLP, for one year beginning on January 15, 20167. The company received $45,000 cash from the new tenant as an advance payment of rent for the first six months of the lease.

Explanation / Answer

Ninatori Fashion Supply Corp Journal Entries #21 Date Account Title Dr $ Cr $ Dec 30. Cash                 500,000 Note Payable                 500,000 ( receipt of loan amt against issue of 7.5% 60 day Note   payable ) ( Interest accrual not recorded as not told as requirement) #22 Date Account Title Dr $ Cr $ Dec 30. Long term Debt                 750,000 Interest Expense                   58,300 Cash                 808,300 ( recording Loan principal & interest payments) #23 (assuming the rent is for next year's 6 months) Date Account Title Dr $ Cr $ Dec 30. Cash                   45,000 Unearned Rent Revenue                 45,000 ( recording advance rent received and the unearned revenue liability). #24 Date Account Title Dr $ Cr $ Dec 30. Equipment                   42,000 Accumulated Depreciation -Equipment                   38,000 Cash                     10,000 Gain on Sale of Assets                   6,000

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