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Virty [35]
3 years ago
12

Mama's Pizza Shoppe borrowed $7,200 at 12% interest on May 1, 2021, with principal and interest due on October 31, 2022. The com

pany's fiscal year ends June 30, 2021. What adjusting entry is necessary on June 30, 2021
Business
1 answer:
olganol [36]3 years ago
7 0

Answer:

<h2>Mama's Pizza Shoppe</h2>

Adjusting Entry on June 30, 2021:

Debit Interest Expense $144

Credit Interest Payable $144

To accrue interest expense for the year (2 months).

Explanation:

a) Calculation: The interest on the borrowing is $144 ($7,200 x 12%)/12 x 2

b) Adjusting entries are prepared at the end of the accounting period in order to recognize non-cash expenses and revenue, prepaid expenses, and revenue received in advance, and depreciation expense for the period.  It is in accordance with the accrual concept and matching principle of generally accepted accounting principles.  These require that expenses and revenue are recognized on the accrual basis whether cash is paid or received for them or not.  And that expenses and revenue are matched to the period they occur.

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Answer:

The answer is b.Cash ,000 Notes Payable ,000

Explanation:

The exact entry Drake Builders Company has to record in its accounting book for the proceeds received from the issuance of the note is:

1st January

Dr Cash                         400,000

Cr Note Payable          400,000

As at the time the note is issued, no interest expenses has been incurred, all the answer with Interest expenses can be eliminated.

In fact, interest expenses is only incurred and accrued during the lifetime of the note, based on the number of days the note is hold; that is, from the day the fund is lend out to Drake Builders Company; not on the day of issuance.

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3 years ago
Which of the following statements about taxes is FALSE?
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States dont collect income tax the government does so B
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You are considering adding a microbrewery on to one of your firm's existing restaurants. This will entail an increase in invento
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Answer:

The change in net working capital resulting from the addition of the microbrewery is $5,500 (decrease)

Explanation:

There are 3 key elements of working capital. These are;

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____ attributes are those that require some trial or consumption before evaluation
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The master budget at Western Company last period called for sales of 225,000 units at $9 each. The costs were estimated to be $3
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Answer:

Sales volume variance $26,250 Favorable

Explanation:

<em>The sales volume variance is calculated as the difference between the budgeted and the actual sales volume multiplied by he standard contribution per unit</em>

                                                                       Units

Budgeted sales units                                 225,000

Actual sales units                                      <u> 230,000</u>

Sales volume                                              5,000 favorable

Standard contribution(9-3.75)              <u>     × $5.25</u>

Sales volume variance                        <u>    $ 26,250 </u>

Sales volume variance                        $26,250 Favorable

<em>Note standard contribution = standard selling price - standard variable cost</em>

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