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Ipatiy [6.2K]
3 years ago
9

On November​ 1, 2018, Arch Services issued $ 331 comma 000of eightminusyearbonds with a stated rate of 14​%at par. Interest paym

ents occur each April 30 and October 31. On December​ 31, 2018, Arch made an adjusting entry to accrue interest at yearminusend.What is the amount of Interest Expense that will be recorded on December​ 31, 2018?​ (Do not round any intermediate​ calculations, and round your final answer to the nearest​ dollar.)
Business
1 answer:
adelina 88 [10]3 years ago
5 0

Answer:

<h2>Arch Services</h2>

Interest Expense as at December 31:

Explanation:

a) Computation of Interest Expense:

Interest per annum = $331,000 x 14% = $46,340

Interest per month = $3,861.66667 ($46,340/12)

Interest for two months = $7,723 ($46,340/12) x 2

b) Interest on bonds is usually paid monthly, quarterly, semi-annually, or yearly.  In this example, the interest is payable every six months, on April 30 and October 31.  However, as the year ends on December 31, there is need to accrue interest expense for the period, in line with the accrual concept and matching principle of generally accepted accounting principles.  These require that expenses are accrued for the period for which they are incurred and matched to the revenue that they produced whether payment was made or not for them.

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Momentous Occasions is a photography business that shoots videos at college parties. The freshman class pays​ $1,000 in advance
Viefleur [7K]

Answer:

a. Considering the $1,000 paid by the freshman class,

Revenue earned on April 2

Did the earnings occur on the same date the cash was received No

b. Considering the $4,100 paid by the sophomore class,

Revenue earned on April 2

Did the earnings occur on the same date the cash was received No

Explanation:

a. Considering the $1,000 paid by the freshman class, on what date was revenue earned? Did the earnings occur on the same date the cash was received?

Revenue According to IFRS 15 is earned when earnings occur on the same date the cash was received when Momentous Occasions (the entity) transferres goods or services to the customer ( freshman class)

Thus $1,000 paid by the freshman class on March 3 is a Deferred Revenue. Earnings did not occur on the same date the cash was received.

Revenue occured when  Momentous Occasions (the entity) transferred goods or services to freashman class on April 2

b. Considering the $4,100 paid by the sophomore class, on what date was the revenue earned? Did the earnings occur on the same date cash received?

Revenue According to IFRS 15 is earned when earnings occur on the same date the cash was received when Momentous Occasions (the entity) transferres goods or services to the customer ( freshman class)

Revenue occured when  Momentous Occasions (the entity) transferred goods or services to freashman class on April 2

The $4,100 paid by the sophomore class on February 28 is payment for services rendered by  Momentous Occasions on  party held on April 2.

Thus Earnings did not occur on the same date the cash was received.

5 0
3 years ago
On January 1, JC Co. accepted a 60-day, 6%, note in the amount of $10,000 from a customer. On March 2, the due date of the note,
sammy [17]

Answer:

Cash account in the amount of $10,100

Explanation:

The journal entry to be recorded for the receipt of payment is as:

Cash A/c.............................................Dr $10,100

        Note receivable A/c...................Cr  $10,000

        Interest Revenue A/c..................Cr  $100

Being recoded the receipt of payment

As payment is received so asset is increasing and any increase in asset is debited. Therefore, cash account is debited. And the note receivable got decrease will be credited and the interest revenue is also credited.

Computation of interest revenue is as:

Interest revenue = Amount × % of note × Days / Number of days in a year

= $10,000 × 6% × 60 / 360

= $100

Note: Assume 360 days in a year

3 0
3 years ago
If you were starting a new business, describe at least three departments to the company that you would need right away. Why are
Natali [406]

Answer:

I would need a computer and then a laptop to work fast as I can and that will make me get more money

7 0
3 years ago
All sources of income are known as which of the following?
Oksanka [162]
I think the correct answer from the choices listed above is the first option. All sources of income are known as gross income. It is an <span>individual's total personal </span>income<span>, before accounting for taxes or deductions. Hope this answers the question. Have a nice day.</span>
4 0
3 years ago
Read 2 more answers
Why is the savings account better than a checking’s account for saving money?
Lisa [10]

Because it pays a higher rate of interest.

A savings account is better than a checking account for saving money because they normally pay a higher interest rate than a checking account. Quite often, a checking account will not pay any interest at all.

7 0
3 years ago
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