FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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(32) The
A. Interest Payable and a credit to Notes Payable.
B. Interest Expense and a credit to Cash
C. Interest Expense and a credit to Interest Payable
D. Interest Payable and a credit to Cash.
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- 26arrow_forwardThe accounting treatment of Discount on bill discounted is: a. A current liability b. A current asset c. An income for a bank d. An expenses for a bankarrow_forward20 D8 E10-5 exercise FAB Company sells a wide range of merchandise, which are initially purchased on account. Short-term notes are frequently issued to obtain cash. a) On January 10, FAB purchased $200 of merchandise on credit on a perpetual system. b) On March 1, FAB borrowed $600 by issuing a promissory note at face with 8 percent interest accrued at the beginning of each month until paid at maturity in six months. c) On April 1, FAB accrued interest on the $600 note. NAME d) On September 1, FAB paid the note and accrued interest. REQUIRED: 1. On the spreadsheet below, record each event (a) to (d) above; name blank accounts. 2. As each event is recorded, indicate its effect on FAB's current ratio, debt-asset ratio, and times interest earned: Increase, Decrease, or No effect. FAB had $3000 liabilities and $5000 total assets prior to January 10. Event--FAB Co. Beginning Balanc a)buy merchandise b) receive on note c) accrue interest for March on Apr 1 d) pay note pay interest Ending…arrow_forward
- Paid interest expense on Note recorded previously (above). Select the account(s) that would be debited and credited when recording the above transaction. If a second debit or credit does not apply, select "None" as a match. Debit Debit Credit Credit Interest Expense Interest Payable Interest Payable Casharrow_forwardUnder the accrual basis of accounting - if cash has been received before the revenue has been earned, which of the following journal entries should be recorded? A) Debit Cash, Credit Unearned Revenue. B) Debit Cash, Credit Sales Revenue. C) Debit Unearned Revenue, Credit Cash. D) Debit Cash, Credit Accounts Receivable.arrow_forwardAn “Accounts Receivable Customer Balances” report shows revenues by customer for a specified date range customer balances owed as of a specific date cash payments to creditors for a specific date range sales by customer as of a specific datearrow_forward
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