Answer: Claim the organization as their legal property.
Explanation:
As the sole owners of M and M.Florist, Marie and Marti can claim the organization as their legal property because the law does not separate them from the company like it does to LLCs. This is a Partnership and as such both of them can be held personally liable for the operations of the business including debt repayments if the business fails to do so.
For this reason and more, they are allowed to claim the business as their legal property.
Macintosh Inc. changed from LIFO to the FIFO inventory costing method on January 1, 2021.
Inventory values at the end of each year since the Inception of the company are as follows:
FIFO LIFO
2019 $196,000 $178,000
2020 392,000 356,000
Required:
Ignoring Income tax considerations. prepare the entry to report this accounting change
Answer:
You only need to adjust the ending inventory for 2020, since the ending inventory for 2019 no effect on the income statement. This happens because FIFO always uses the first units purchased to determine the cost of goods sold, and after one year, there is no real effect on net income.
The adjustment for ending inventory 2020 should be:
Dr Merchandise inventory 36,000
Cr Cost of goods sold 36,000
This adjustment will decrease the expenses during 2020 and increase that year's net income.
After researching the different forms of business organization, Natalie Koebel decides to operate "Cookie Creations" as a corporation. She then starts the process of getting the business running. In November 2015, the following activities take place.
A. Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
B. She opens a bank account under the name "Cookie Creations" and transfers $500 from her personal account to the new account in exchange for common stock.
C. Natalie pays $65 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise.
D. She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.
E. Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally cost her $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business in exchange for common stock.
F. Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint: The note does not have to be repaid for 24 months. As a result, the notes payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.)
G. She buys more baking equipment for $900 cash.
H. She teaches her first class and collects $125 cash.
I. Natalie books a second class for December 4 for $150. She receives $30 cash in advance as a down Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2016.
(a) Prepare journal entries to record the November transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
(b) Post the journal entries to general ledger accounts.
(c) Prepare a trial balance at November 30.
Answer:
ANatalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
The new union president has proposed a couple of ideas that are very unusual: 1. "We should make an effort to help solve problems in the business." 2. "We should encourage our members who have the right experience and training to apply for supervisor jobs." Are these ideas good or not?
Answer:
In simple words, supervisory jobs refers to those jobs in which an individual has to monitor the performance of other individuals working under his or her direction and guidance.
The opinion of the president, therefore, is not bad as an employee with relevant experience gets a certain respect and have adequate level of knowledge for teaching others.
The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero.
1. True
2. False
Answer:
False
Explanation:
The marginal cost curve intersects across total curve at the options level where average costs are zeo
Work
Local Co. has sales of $ 10.8 million and cost of sales of $ 5.7 million. Its selling, general and administrative expenses are $ 550,000 and its research and development is $ 1.2 million. It has annual depreciation charges of $ 1.2 million and a tax rate of 35 %.
a. What is Local's gross margin? (answer in %, Round to one decimal place.)b. What is Local's operating margin? (answer in %, Round to one decimal place.)c. What is Local's net profit margin? (answer in %, Round to two decimal places.)
Answer:
Gross profit Margin = 47.2%
Operating profit margin = 19.9%
Net Profit Margin = 12.93%
Explanation:
Requirement A: Gross profit margin
Gross Profit = Sales - Cost of sales
Gross Profit = 5.1m
Gross profit Margin = Gross profit/Sales x 100
Gross profit Margin = 5.1/10.8 x 100
Gross profit Margin = 47.2%
Requirement B: Operating profit margin
Operating profit margin = Operating Profit/ Sales x 100
Operating Profit = Gross Profit - selling,general and administrative expense -research and development - depriciation
Operating Profit = 5.1m - 0.55m - 1.2m - 1.2m
Operating Profit = 2.15m
Operating profit margin = 2.15m/10.8m x 100
Operating profit margin = 19.9%
Requirement C: Net profit Margin
Net Profit margin = Net profit / Sales x100
Net Profit = Operating profit - tax
Net Profit = 2.15m - (2.15m x 35%)
Net Profit = 2.15m - 0.7525m
Net Profit = 1.3975m
Net Profit Margin = 1.3975m/10.8m x 100
Net Profit Margin = 12.93%
You find that the bid and ask prices for a stock are $14.25 and $15.45, respectively. If you purchase or sell the stock, you must pay a flat commission of $30. If you buy 100 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars
Answer:
$180
Explanation:
The bid price of a stock is $14.25
The ask-price of a stock is $15.45
A flat commission of $30 must be paid in the stock
100 shares of stock are bought
Therefore, the total implied and actual transaction costs can be calculated as follows
= Commission+(ask price-bid price)×number of shares
= 30×2+($15.45-$14.25)×100
= 60+ 1.2×100
= 60+120
= $180
Hence the total implied and actual transaction cost is $180
If 200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but 220,000 machine‐hours were actually used at an actual rate of $6/machine‐hour, what is the variable overhead efficiency variance?
Answer:
Variable overhead efficiency variance= $100,000 unfavorable
Explanation:
Giving the following information:
200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but 220,000 machine‐hours were used.
To calculate the variable overhead efficiency variance, we need to use the following formula:
Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Variable overhead efficiency variance= (200,000 - 220,000)*5
Variable overhead efficiency variance= $100,000 unfavorable
When the Variable overhead efficiency variance is = $100,000 unfavorable
What is the Efficiency variance?
Giving the following information are:
200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but [tex]220,000[/tex] machine‐hours were used. Now we calculate the variable overhead efficiency variance, Then we need to use the following formula are below mention. The variable overhead efficiency variance is= (Standard Quantity - Actual Quantity)*Standard rate. Then Variable overhead efficiency variance= [tex](200,000 - 220,000)*5[/tex]
Thus, Variable overhead efficiency variance= $100,000 unfavorable
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A waiter fills your water glass with ice water (containing many ice cubes) such that the liquid water is perfectly level with the rim of the glass. As the ice melts,
Answer:
As the ice melts and turns into water, the level of the liquid water will lower and it will no longer be perfectly leveled with the rim of the glass. This happens because water has a unique property, its solid state occupies a larger volume than its liquid state, i.e. as waters turns into ice, it expands and occupies more space. Generally, as liquids become solid, they will shrink and occupy less space, but that doesn't happen with water.
Explanation:
Use the following information . On January 1, 2018, Dennis Company purchased land for an office site by paying $540,000 cash. Dennis began construction on the office building on Jan 1. The following expenditures were incurred for construction: Date Expenditures January 1, 2018 $ 360,000 April 1, 2018 504,000 May 1, 2018 900,000 June 1, 2018 1,440,000 The office was completed and ready for occupancy on July 1st of the following year. To help pay for construction, $720,000 was borrowed on January 1, 2018 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2018 was a $300,000, 12%, 6-year note payable dated January 1, 2016. Assume the weighted-average accumulated expenditures for the construction project are $870,000. The amount of interest cost to be capitalized during 2018 is:___________.
Answer:
$82,800
Explanation:
The computation of the amount of interest cost to be capitalized during 2018 is shown below:-
Amount of interest cost to be capitalized = (Borrowed amount × Rate of interest) + ($300,000 ÷ 2 × Rate of interest)
= ($720,000 × 9%) + ($150,000 × 12%)
= $82,800
Therefore for computing the amount of interest cost to be capitalized during 2018 we simply applied the above formula.
Suppose on January 1 Andrew's Tavern prepaid rent of $ 16 comma 800 for the full year. At November 30, how much rent expense should be recorded for the period January 1 through November 30?
Answer:
The rent expense to be recorded on November 30 will be $15400.
Explanation:
The accrual principle in the accounting states that the revenues and expenses for a period should be matched and recorded in their respective periods. Following the principle, we should record the expenses in the period to which they belong. Thus, the rent that is paid in advance is an asset and it will be expensed out as it is consumed.
The rent of $16800 is paid for the period from January to December.
The rent to be recorded as rent expense on 30 November will be for 11 months from January to November.
Rent expense = 16800 * 11/12 = $15400
​A restaurant, which operates in a perfectly competitive market, is evaluating whether it should serve breakfast on a daily basis. It would choose to do this when its revenues cover its variable costs. True or False
Answer:
TRUE
Explanation:
A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
In the short run, the firm would continue to operate if its revenue covers variable cost. if it doesn't it would shut down.
Identify the best definition of money. whatever serves society in three functions: medium of exchange, store of value, and unit of account paper bills and coins metal or paper currency produced by governments to enable the exchange of goods and services the exchange of goods and services enabled via the double coincidence of wants
Answer:
Unit account of paper bills
Explanation:
I took test during school
The effective management of diversity can enhance the social responsibility goals of an organization. Other areas where sound management of diverse workforces can improve the effectiveness of an organization and its competitive advantages include all but one of the following?
a. Problem creation
b. Organizational flexibility
c. Marketing
d. Resource acquisition
Answer:
The correct answer is the option A: Problem creation.
Explanation:
To begin with, when it comes to diversity in the organization the right management of it can ensure the fact of increase the development and growth of the company in its whole, and moreover when it comes to areas that are really needed of diversity of thoughts and cultures in general. Therefore that the marketing area, the resource acquisiton and organization flexibility are the areas that obviously would be benefit by the increase of the diversity of the workforce so that the effectiveness of the organization as a whole will be increase as well too.
You need to make 70
servings of Caesar dressing,
Each serving takes 2
teaspoons of crushed garlic,
How many teaspoons of
crushed garlic do you need?
Answer:
Answer:
140 teaspoons of crushed garlic.
Explanation:
Since you're going to make 70 servings and each requires 2 tsp of crushed garlic, we simply multiply 70 x 2.
I hope this helps :)
The Maine Media Workshop is similar to____________ because the people who take classes there learn by doing.
1. mentoring,
2. on-the-job training,
3. corporate University
Answer:
On-the-job training
Explanation:
Maine Media Workshop is similar to ON-THE-JOB TRAINING, reason been that the people, employees or workers who take classes there learn by doing.
On the job training can be defined as a training which is provided at the workplace in which the during the training, employees are
familiarized with the working environment which is why On-the-Job Training is tend to be based on the principle of learning by doing because the workers or the empolyees learn the job while performing it within their workplace environment or while the employees are doing the actual job.
Hence ,On-the-job training which is also known as OJT enables or help employees to gain hands on knowledge in their workplace or work environment.
Therefore a Managers who want or desire to keep their employees or workers training costs as low as possible should make use of ON -THE-JOB TRAINING.
The absorption-cost approach is used by most companies for all of the following reasons except that:______a) absorption cost information is readily provided by a company’s cost accounting system.b) basing prices on only variable costs could encourage managers to set too low a price to boost sales.c) this approach is more consistent with cost-volume-profit analysis.d) absorption cost provides the most defensible bases for justifying prices to interested parties
Answer:
c) this approach is more consistent with cost-volume-profit analysis.
Explanation:
The absorption costs does not separate the fixed costs and variable cost for profit determination.
This hence, is not adequate for internal purposes of as it does not provide management accountants of the changes in fixed and variable costs that arise as a result of changes in levels of sales demand.
Thus this method is not consistent with cost-volume-profit analysis.
a companys sales in year 1 were 250,000 and in year 2 were 287,500. Using Year 1 as the base year, the percetn change for year 2 ompared to the base year is:
Answer:
115%
Explanation:
Computation of the percentage change for year 2 when compared to the base year
Using this formula
Percentage change=(Year 2 Sales /Year 1 Sales )* 100
Let plug in the formula
Percentage change =($287,500/$250,000) * 100
Percentage change =1.15*100
Percentage change = 115%
Therefore the percentage change in year 2 when compared to the base year will be 115%
Trak Corporation incurred the following costs while manufacturing its bicycles.
Bicycle components $100,000 Advertising expense $45,000
Depreciation on plant 60,000 Property taxes on plant 14,000
Property taxes on store 7,500 Delivery expense 21,000
Labor costs of assembly-
line workers 110,000 Sales commissions 35,000
Factory supplies used 13,000 Salaries paid to sales clerks 50,000
Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs.
Bicycle components
Depreciation on plant
Property taxes on store
Labor costs of assembly-line workers
Factory supplies used
Advertising expense
Property taxes on plant
Delivery expense
Sales commissions
Salaries paid to sales clerks
Answer:
Required: Identify the costs as direct materials, direct labor, manufacturing overhead, or period costs.
They are classified below:
Bicycle components: DIRECT MATERIALS
Depreciation on plant: MANUFACTURING OVERHEAD
Property taxes on store: PERIOD COST
Labor costs of assembly-line workers: DIRECT LABOUR
Factory supplies used: MANUFACTURING OVERHEAD
Advertising expense: PERIOD COST
Property taxes on plant: MANUFACTURING OVERHEAD
Delivery expense: PERIOD COST
Sales commissions: PERIOD COST
Salaries paid to sales clerks: MANUFACTURING OVERHEAD
Definition of terms used:
Period cost is any cost incurred which was not directly involved during production.
Manufacturing overhead can be said to be indirect costs incurred during production.
Direct labour costs involves payment made to workers involved in production.
Direct materials cost are costs of raw materials used in production.
Therefore,
Bicycle components are classified as direct materials.
Depreciation on plant are classified as manufacturing overhead.
Property taxes on store are classified as period cost.
Labor costs of assembly-line workers are classified as direct labour.
Factory supplies used are classified as manufacturing overhead.
Advertising expense is classified as period cost
Property taxes on plant are classified as manufacturing overhead.
Delivery expenseis classified as period cost.
Sales commissions is classified as period cost.
which 2 statements regarding intuit approved quickbooks online apps are true? Select all that apply 1. It is recommended that the master administrator of the quickbooks company complete the setup. 2.You can sign up for quickbooks payments fro the dashboard in quickbooks online. 3. You can connect an existing qucibooks payments,Go payment or intiut merchant services account 4.it is a best practice for the proadvisor to complete and sign the quickbooks paymment agreement on behalf of client 5. you mus record the receive payment for each invoice paid using the pay on button.
Answer:
1. It is recommended that the master administrator of the quick-books company complete the setup.
3. You can connect an existing quick-books payments, Go payment or intuit merchant services account.
Explanation:
Quickbook is an accounting software which help in recording and processing a financial transaction. This software is best suited for small to medium sized organisations. Master administrator has all the access rights of a company administrator. Master administrator is the one who initially creates the quick book company file and he is then assigned as Master administrator.
The Quickbook is accounting software that helps in recording and processing financial transactions that are in monetary terms. This software is easy to access and therefore best for small and medium-sized business firms.
The 2 statements that are true about the intuit approach in the app are as follows:
1. It is recommended that the master administrator of the quick-books company complete the setup.
3. You can connect an existing quick-books payment, Go payment, or intuit merchant services account.
Under the Quickbook online apps, there is a Master administrator that gives access to all the rights of the business to the operating administrator. The master administrator is known for making or creating the initial book in the Quickbooks company file.
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At the beginning of the year, paid-in capital was $164 and retained earnings was $94. During the year, the stockholders invested $48 and dividends of $12 were declared and paid. Retained earnings at the end of the year were $104.
Net income for the year was:_______
Answer:
$22
Explanation:
From the question above, the paid in capital at the beginning of a year was $164
Retained earnings was $94
During the year the amount invested by stockholders was $48 and a dividend of $12 was declared and paid.
At the end of the year the retained earnings was $104
Therefore, the net income for the year can be calculated as follows
Net income= Retained earnings at the end of the year-retained earnings at the beginning of the year+dividend
Net income= $104-$94+$12
= $22
Hence the net income for the year was $22
You purchased a share of SPCC for $100 and expect to receive a dividend of $5 in one year. If you expect the price after the dividend is paid to be $110, what total return will you have earned over the year
Answer:
The answer is 15%
Explanation:
(P1 - Po) / Po + D
Where P1 is the price of the share at the end of the year
Po is the price of the share at the beginning of the year
D is the Dividend receceived
P1 is $110
Po is $100
And Dividend is 5%
($110 - $100) / $100 + 5 %
$10/100 + 5%
10% + 5%
= 15%
The total return will you have earned over the year for the purchase of a share of SPCC is 15%
Tate Company purchased equipment on November 1, 2015 and gave a 3-month, 9% note with a face value of $20,000. The December 31, 2015 adjusting entry is
Answer:
Dr Interest expense 300
Cr Interest payable 300
Explanation:
Preparation of December 31, 2015 adjusting entry for Tate Company
Since Tate Company had purchased the equipment on November 1, 2015 in which the company gave a 3-month with 9% note and a face value of $20,000, this means we have to record the transaction by Debiting Interest expense with 300 and Crediting Interest payable with the same amount . The amount of 300 is calculated as 2/12×9%×20,000
Therefore Tmthe December 31, 2015 adjusting entry will be :
Dr Interest expense 300
Cr Interest payable 300
The following events took place for Digital Vibe Manufacturing Company during January, the first month of its operations as a producer of a digital video monitor.
a. Purchased $168,500 of materials.
b. Used $149,250 of direct materials in production.
c. Incurred $360,000 of direct labor wages.
d. Incurred $120,000 of factory overhead.
e. Transferred $600,000 of work in process to finished goods.
f. Sold goods for $875,000.
g. Sold goods with a cost of $525,000.
h. Incurred $125,000 of selling expenses.
i. Incurred $80,000 of administrative expenses.
Using the information given, complete the following:
a. Prepare the January income statement for the Digital Vibe Manufacturing Company.
b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations.
Answer:
1. Income Statement for Digital Vibe Manufacturing company
For the Month ended January 31
Sales 875,000
Cost of goods sold 525,000
Gross Profit 350,000
Operating Expenses:
Selling expenses 125,000
Administrative expenses 80,000
Total Operating expenses 205,000
Net Income $145,000
B.
1. Ending material inventory = Material purchased - Used material in production
= 168,500 - 149,250
= $19,250
2. Ending work in Process inventory = Material used in production + Direct labor + Factory overhead - Transferred of work in process to finished goods
= 149,250 + 360,000 + 120,000 - 600,000
=$29,250
3. Ending finished goods inventory = Transfer from work in progress - Cost of goods sold
= 600,000 - 525,000
= $75,000
In the long run, when price is less than average total cost for all possible levels of production, a firm in a competitive market will choose to exit (or not enter) the market.
a. True
b. False
Answer:
a. True
Explanation:
A competitive market is a market in which there are many buyers and sellers. Also, sellers have similar goods and and they don't have the power to influence the market. This means that in a competitive market companies have to accept the price define by the market and if the price is less than average total cost for all possible levels of production, a firm in a competitive market will choose to exit (or not enter) the market as it doesn't have the possibility to do something to influence the price and it won't be able to make a profit. According to that, the statement is true.
Feather Tissues Inc. decided to change the color of its tissue box from red to blue because blue was thought to be visually pleasing to consumers at the time of purchase. The change in color represents the ________ aspect of packaging.
Answer:
aesthetic
Explanation:
Based on the information provided within the question it can be said that the change in color represents the aesthetic aspect of packaging. An aesthetic aspect refers to making sure that the packaging has an overall pleasant, positive, beautiful, or artful appearance in order to evoke positive emotions on the viewer. Which in this scenario is exactly what Feather Tissues Inc. is trying to accomplish by changing the color from red to blue, in order to please/attract their customers and in term increase sales.
Knowledge Check 01 Cartier Corporation currently sells its products for $50 per unit. The company’s variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company’s contribution margin ratio?
Answer:
Contribution margin ratio = 0.6 or 60%
Explanation:
The contribution margin per unit is the amount that each unit contributes to covering the total fixed costs. It is the contribution of each unit towards fixed costs after deducting the variable costs per unit from the selling price per unit.
The contribution margin ratio is the unit contribution margin expressed as a percentage of the selling price per unit.
Contribution margin ratio = Contribution margin per unit / Selling price per unit
Where,
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = 50 - 20 = $30
Contribution margin ratio = 30 / 50 = 0.6 or 60%
On December 2, 2018, Eshares, Inc. purchases land. In payment for the land, Eshares, Inc. issues 6 comma 000shares of common stock with $ 10par value. The land has been appraised at a market value of $ 480 comma 000.Which of the following is included in the journal entry to record this transaction?
a. debit Cash $500,000
b. credit Common Stock-$10.00 Par Value for $100.000 and credit Paid-In Capital in Excess of Par-Common $400000
c. $1000 Par Value for S100 000 and debit Paid-In Capital in Excess of Par debit omm on Stock -Common $400,000
d. credit Common Stock--$10 00 Par Value for $500,000 Click to select your answer
Answer:
Credit Common Stock $ 10 Par Value for $ 60,000 and Credit Paid-In Capital in Excess of Par-Common $ 420, 000
Explanation:
Since we were told that On December 2, 2018, Eshares, Inc. purchases a land in which Eshares issues 6 ,000 shares of common stock with $ 10par value and the land was appraised at a market value of $ 480,000 this means the Journal entry will be recorded as:
Credit Common Stock $ 10 Par Value for $ 60,000
Credit Paid-In Capital in Excess of Par-Common $ 420, 000
Calculated as:
Common stock = 6,000 shares x $10 = $60,000
Paid-in Excess of par = $480,000 - $60,000
= $420,000
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next 3 years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 12 percent and the company just paid a $1.30 dividend. what is the current share price
Answer:
$36.81
Explanation:
Div₀ = $1.30
Div₁ = $1.625
Div₂ = $2.03125
Div₃ = $2.5390625
Div₄ = $2.6914 at a constant g of 6%
first we need to determine the terminal value in year 3:
P = $2.6914 / (12% - 6%) = $44.86
the current stock price, P₀ = $1.625/1.12 + $2.03125/1.12² + $2.5390625/1.12³ + $44.86/1.12³ = $1.45 + $1.62 + $1.81 + $31.93 = $36.81
Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $35,500; net cash used in investing activities was $13,000 and net cash used in financing activities was $16,500. If the beginning cash balance is $6,500, what is the ending cash balance
Answer:
The answer is $38,500
Explanation:
Operating activities: Cash generated or used to run the day-to-day business operations.
Investing activities: Cash used for investing in assets like securities, bonds, equipment, or proceeds from these assets.
Financing activities: Cash generated from loan and/or payments made to reduce loan balances
Ending cash balance = Net Cash from operating activities + net cash from investing activities - net caash from financing activities + Beginning cash balance
Ending cash balance = $35,500 + $13,000 - $16,500 + $6,500
$38,500
On December 31, 2018, Wintergreen, Inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. Wintergreen received $139,875 when it issued the bonds (or $150,000 × .9325). After recording the related entry, Bonds Payable had a balance of $150,000 and Discounts on Bonds Payable had a balance of $10,125. Wintergreen uses the straight-line bond amortization method. The first semiannual interest payment was made on June 30, 2019.Complete the necessary journal entry for June 30, 2019 by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer: Please see explanation column
Explanation:
Journal entry for June 30
Date Amount Debit Credit
June 30 Bond Interest expense $5,756
Discount on Bonds Payable $506
Cash $5,250
Calculation:
Cash = 150,000 x 7%x 6/12 = $5,250
10-year bonds pay interest semiannually indicates 20 interest periods
Straight line Amortization of the discount =$10,125/20 = $506
Bond interest expense= Interest + amortization on discount
Interest = $150,000 x 7% x 6/12 = $5,250 + 506= $5,756.