question archive Based on the business events below HOW A (a) journal entry worksheet, (2) post the journal entries to each respective general ledger account and (3) how A basic balance sheet, income statement for the year ended December 31, 2018
Based on the business events below HOW A (a) journal entry worksheet, (2) post the journal entries to each respective general ledger account and (3) how A basic balance sheet, income statement for the year ended December 31, 2018
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Based on the business events below HOW A (a) journal entry worksheet,
(2) post the journal entries to each respective general ledger account and (3) how A basic balance sheet, income statement for the year ended December 31, 2018. Extra credit for the preparation of a statement of cash flows.
-On January 1, John, Paul, and Mark form a partnership ("JPM") and each contributes $10M so that each will be a one-third owner JPM.
-On January 5, JPM purchases land for $20M.
-On February 1, JPM hires a contractor to build a commercial office building for $40M.
-On February 15, JPM receives a construction loan from Fast Bank for $30M. The term is for 12 months at 5%.
-On March 1, JPM draws down $10M of the construction loan and pays the contractor.
-On April 1, JPM draws down $10M of the construction loan and pays the contractor.
-On April 1, JPM pays the bank for 1 month of interest.
-On May 1, JPM draws down the $10M of the construction loan and pays the contractor
-On May 1 JPM pays the bank for interest for the draws on March 1 and April 1.
-On June 1, JPM uses $10M of cash to pay the balance to the contractor and the contractor delivers the building. Note, that interest costs on the construction loan are capitalized to the building.
-On June 1, JPM receives $30 of permanent financing and uses the proceeds to pay the construction lender along with accrued interest. The term of the permanent loan is 5 years at 4% interest. The loan is self-amortizing with payments of interest and interest due on December 31.
-On June 1, JPM rents the entire building to one tenant for a 5 year period. The terms are no rent payable for year 1 and the rents for years 2, 3, 4 and 5 are $10,000, $15,000, $20,000 and $25,000 respectively.
-Property taxes are taxes are $1.2 per year prorated.
-Management fees are 1.5% of the value of the property (cost for constructed property).
-On December 31, JPM records current year depreciation.
-On December 31, JPM makes a principal and interest on the permanent loan.
