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Leviafan [203]
4 years ago
8

On January 1, Bloomingdale, Inc. borrows $92,000 from First Estate Bank. The loan is due in one year along with 4% interest. The

company is preparing its quarterly report for March 31. Which of the following best describes the necessary accrual for interest expense? A. $3,680 increase expenses, decrease cash B. $ 920 increase liabilities, increase expenses C. $3,680 increase liabilities, decrease expenses D. $3,680 decrease liabilities, decrease cash E. $ 920 decrease liabilities, decrease cash
Business
1 answer:
Thepotemich [5.8K]4 years ago
8 0

Answer:

B. $ 920 increase liabilities, increase expenses

Explanation:

The interest expense for the entire duration of the loan (1 year) may be determined as the product of the interest rate percentage on the principal amount borrowed.

As such, interest for the duration of the loan

= 4% * $92,000

= $3680

As at the end of the first quarter (March 31), amount of expense to be accrued

= 1/4 * $3680

= $920

To account for this,

Debit Interest expense $920

Credit Accrued Interest $920

Hence Expense increase as well as liability in form of accrued expense.

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Answer:

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Answer:

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3 years ago
Company management completes event identification and analyzes the risks. The company wishes to assess its risk after management
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Answer:

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7 0
3 years ago
the inventory method that will always produce the same amount for the cost of goods sold in a periodic invenotry system as
liraira [26]

Answer:

FIFO.

Explanation:

Note: This question is not complete. The complete question is therefore given before answering the question as follows:

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

FIFO.

LIFO.

Weighted average.

None of these answer choices is correct.

The explanation to the answer is now given as follows:

First-in, first-out (FIFO) is an inventory method under which the oldest inventory items are recorded in the account as being issued or sold first.

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A perpetual inventory system to an inventory valuation method under which there is an update to the inventory account after every sale and purchase of inventory items. This is done by using computer softwares such as computerized point-of-sale systems and enterprise asset management software.

When FIFO inventory method is being used, both the periodic inventory system and perpetual inventory system will always produce the same amount for cost of goods sold.

Based this explanation, the correct option for this question is FIFO.

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