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Ch. 2

The Eldorado Corporation's controller prepares adjusting entries only at the end of the fiscal year. The following adjusting entries were prepared on December 31, 2016:
   
  Debit Credit
  Interest expense7,200      
       Interest payable  7,200     
  Rent expense35,000      
       Prepaid rent 35,000     
  Interest receivable500      
       Interest revenue 500     


Additional information:
1.
The company borrowed $120,000 on March 31, 2016. Principal and interest are due on March 31, 2017. This note is the company’s only interest-bearing debt.
2.Rent for the year on the company’s office space is $60,000. The rent is paid in advance.
3.
On October 31, 2016, Eldorado lent money to a customer. The customer signed a note with principal and interest at 6% due in one year.

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