5 Accounting for notes receivable Poole Enterprises loaned $30,000 to Boyd Co. o

Question

5 Accounting for notes receivable

Poole Enterprises loaned $30,000 to Boyd Co. on September 1, 2014, for one year at 7 percent interest.

Show the effects of the following transactions in a horizontal statements. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). The letters NA indicate that an element is not affected by the event. (Do not round intermediate calculations and round final answers to nearest dollar amount. Enter any decreases to account balances and cash outflows with a minus sign.)

POOLE ENTRPRISES

Horizontal Statements Model

Cash+Notes Receivables+Interest Receivables=Equity/ Revenue-Expense=Net Income Statement

Retained Earning of Cash Flow

1 9/1/14

2 12/31/14

3 9/1/15

9/1/15

9/1/15

Poole Enterprises loaned $30,000 to Boyd Co. on September 1, 2014, for one year at 7 percent interest.

Explanation / Answer

1 9/1/14- Cash outflow of $30000- operating activity

2 12/31/14- Interest accrual for 4 months- $700- NA-not cash flow

3 9/1/15- interest accrual for balance 8 months- $1400- NA-no cash flow

9/1/15-principal receipt- $30000- operating activity

9/1/15- interest receipt- $2100- operating activity

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