Precision Plumbing Company, Inc. Post-Closing Trial Balance December 31, 20XX De
ID: 2459292 • Letter: P
Question
Precision Plumbing Company, Inc.
Post-Closing Trial Balance
December 31, 20XX
Debit
Credit
Cash
$12,300
Accounts receivable
$10,700
Supplies
$1,800
Equipment
$25,800
Accumulated depreciation—Equipment
$12,300
Accounts payable
$3,300
Unearned service revenue
$4,600
Salary payable
$700
Note payable
$15,000
Schaubach, Capital
$9,000
Schaubach, Drawing
$36,000
Service revenue
$66,000
Depreciation expense
$5,500
Salary expense
$9,600
Utilities expense
$4,100
Insurance expense
$3,700
Supplies expense
$1,400
$110,900
$110,900
7. If a $1,000 bond is issued for $970, then the bond has been issued at a _________________. In addition, if the stated interest rate is less than that of the market rate of interest, then the issue price of the bond will be at a _________________. ______________________________________________________________________________
8. What is the normal balance of the account Discount on Bonds payable—a contra account to Bonds payable? To determine the carrying amount, is it added to or subtracted from the Bonds payable account? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
9. An amortization method that allocates an equal amount of bond discount or premium to each interest period over the life of the bond is known as _________________. ______________________________________________________________________________
10. Bonds can be retired at the maturity date or before. Retirement of bonds payable consists of paying the _________________ of the bond. ______________________________________________________________________________
Precision Plumbing Company, Inc.
Post-Closing Trial Balance
December 31, 20XX
Debit
Credit
Cash
$12,300
Accounts receivable
$10,700
Supplies
$1,800
Equipment
$25,800
Accumulated depreciation—Equipment
$12,300
Accounts payable
$3,300
Unearned service revenue
$4,600
Salary payable
$700
Note payable
$15,000
Schaubach, Capital
$9,000
Schaubach, Drawing
$36,000
Service revenue
$66,000
Depreciation expense
$5,500
Salary expense
$9,600
Utilities expense
$4,100
Insurance expense
$3,700
Supplies expense
$1,400
$110,900
$110,900
Explanation / Answer
7. If a $1,000 bond is issued for $970, then the bond has been issued at a _Discount ________________. In addition, if the stated interest rate is less than that of the market rate of interest, then the issue price of the bond will be at a _lower than the face value________________.
(If the issue price is 1000 and we get only 970 that means that the bond was issued at discount. Thus if market rate> stated interest rate the bonds are said to be issued at discount since we are accepting less than what market is offering .This is because market rate is high so people will prefer to buy from one offering higher rate so to sell our bonds we need to sell them at discount.
8. What is the normal balance of the account Discount on Bonds payable—a contra account to Bonds payable? To determine the carrying amount, is it added to or subtracted from the Bonds payable account? ___to determine the carrying amount we need to add the amortization amount since bonds are issued at discount so make it equal to face value at the end we will add it. _
9. An amortization method that allocates an equal amount of bond discount or premium to each interest period over the life of the bond is known as _straight line method of amortization.________________. _in case of straight line we divide the total amount of amortization with its life .
10. Bonds can be retired at the maturity date or before. Retirement of bonds payable consists of paying the __cash at market value _______________ of the bond. __Cash is paid at the market value at the time . the difference if any between the cash paid and face value of bond is loss or gain on retirement of bonds.____________________________________________________________________________
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