1. A company buys a $10,000 bond at 102 as an investment. The correct entry is _
ID: 2420392 • Letter: 1
Question
1. A company buys a $10,000 bond at 102 as an investment. The correct entry is _______________.
a. debit investment in bonds and credit cash for $10,200
b. debit investment in bonds and credit cash for $9,800
c. credit investment in bonds and debit cash for $10,200
d. credit investment in bonds and debit cash for $9,800
2. A company issues bonds having a stated value of $100,000 for $102,500. At maturity, the company will _______________.
a. debit bonds payable for $100,000
b. debit bonds payable for $102,500
c. credit bonds payable for $102,500
d. credit bonds payable for $100,000
3. A company uses the percentage-of-receivables method for establishing the bad-debt reserve. They want the reserve balance to equal 0.5% of debts 30 days old or less, 2% of debts aged 31 to 60 days, and 4% of debts aged over 60 days. An aging report shows $780,000 relating to the past month, $232,600 relating to the prior month, and $89,200 relating to more than two months ago. The balance in the reserve account before adjustment is $10,175. What is the adjusting journal entry?
a. debit allowance for bad debts, credit bad-debt expense $1,945
b. debit bad-debt expense, credit allowance for bad debts $12,120
c. debit bad-debt expense, credit allowance for bad debts $1,945
d. debit bad-debt expense, credit accounts receivable $1,945
4. A company is closing out the accounting period. The inventory balance at the beginning of the period was $222,750, and at the end of the period it was $215,600. Purchases of goods for resale during the period equaled $682,500. What was the cost of goods sold total?
a. $682,500
b. $689,650
c. $675,350
d. $905,250
5. A merchandising company has beginning inventory of 50 units with a total cost of $500. They have the following transactions during the month of January: 1/5 bought 10 units at $11.00 each; 1/8 bought 15 units at $11.25 each; 1/15 sold 8 units for $16 each; 1/22 bought 10 units at $11.50 each and sold 12 units for $16.50 each. The ending inventory is $693.75. What inventory costing method is the company using?
a. weighted average
b. FIFO
c. LIFO – perpetual
d. LIFO – periodic
a. debit investment in bonds and credit cash for $10,200
b. debit investment in bonds and credit cash for $9,800
c. credit investment in bonds and debit cash for $10,200
d. credit investment in bonds and debit cash for $9,800
Explanation / Answer
1) debit investment in bonds and credit cash for $10,200 is the correct answer
The investments are recorded at cost at which they are bought, the investments are bought so it would be debited as the accounting rules states that debit what comes in and credit what goes out.
2) a. debit bonds payable for $100,000
The bonds payable balance will remain at $ 100,000 and the premium 2,500 would be amortised over the life of bonds.
3)
c. debit bad-debt expense, credit allowance for bad debts $1,945
Allowance for bad debt is a liability so it would be credited
4)
COGS = opening inventory + Purhases - closing inventory
= 222,750 + 682,500 - 215,600
= 689,650
Option B is correct answer
5)
The answer is C
0-30 31-60 >60 0.50% 2% 4% Total Current balance Remaining balance 780,000 232,600 89,200 3,900 4,652 3,568 12,120 10,175 1,945Related Questions
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