Answer and Explanation:
The Journal entry is shown below:-
Bonds payable Dr, $1,800,000
(1,800 × $1,000)
To Discount on bonds payable $30,000
To Common stock $720,000
(1,800 × 40 × $10)
To Paid-in-capital in excess of par $1,050,000
(Being conversion of bond into common stock is recorded)
Therefore for recording the conversion using the book value approach we simply debited the bonds payable and credited the discount on bonds payable, common stock and paid-in-capital in excess of par.
I would say A. Is your answer!
Answer:
a. HORIZONTAL METHOD
INCOME STATEMENT
date Income $ - Expenses $ = net income
1 Nov - - - - -
b. adjusting
31 each rent 5,300 - - 5,300
month
c. BALANCE SHEET AS AT 31 DEC
Assets = Equity + Liabilities
+ bank $84,800 - prepaid expense +$84,800
Explanation:
on 1 Nov there is no entry for the amount in the income statement because it is not yet earned only the balance sheet is affected + bank $31800 and + income received in advance ( liability) $31800
each month's rent = $31800/ 6month =$5300
18 months rent = 95400
unearned at december = 18 months - 2 months earned
= 95400- 10600
=$84,800
