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PilotLPTM [1.2K]
3 years ago
15

Electrodo Co. purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable. What effect does this transacti

on have on the accounts under the accrual basis of accounting? a. Net increase in assets and liabilities of $55,000 b. Net increase in assets of $75,000 and a net decrease in liabilities of $30,000 c. Net increase in assets of $35,000 and a net increase in liabilities of $35,000 d. Net increase in assets of $55,000 and a net decrease in liabilities of $35,000
Business
1 answer:
Archy [21]3 years ago
5 0

Answer:

(c). Net increase in assets of $35,000 and a net increase in liabilities of $35,000

Explanation:

Accrual basis of accounting attempts to record transactions as and when they arise and not on the basis of  when money is actually received or paid. Once a liability is certain, such a liability is provided for immediately.

The journal entry for purchase of Land partly by cash and partly for issuing a notes payable would be:

Land                                                  Dr. $55,000

     To Cash                                                          $20,000

     To Notes Payable                                           $35,000

(Being land purchased by payment of $20,000 in cash and a note being issued against the balance amount)

Land and cash are assets whereas Notes Payable is a liability.

So, the effect of the above transaction would be:

Net increase of $35,000 ( $ 55,000 - $ 20,000) as debit in fixed assets account increases their balance whereas cash being a real account, the rule being debit what comes in, credit what goes out. So credit in cash account would reduce the cash balance by $ 20,000.

Notes Payable account which is to be paid in future is a liability which shall increase the liabilities by $ 35,000.

So, the correct answer is (c), Net increase in assets of $35,000 and a net increase in liabilities of $35,000.  

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Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 4% charge on sales for using its c
eduard

Answer:

Explanation:

The journal entry is shown below:

Cash A/c Dr $6,240

Credit card expense A/c Dr $260            ($6,500 × 4%)

            To Sales A/c $6,500

(Being the deposit is recorded)

For recording the deposit, we debited the cash account, credit card expense and credited the sales account so that the proper posting can be done.

0 0
3 years ago
Purchasing power is a producer's ability to buy goods and services. answer true false
Black_prince [1.1K]
Having money with which to buy goods and services is called purchasing power
6 0
3 years ago
Terrence Industries charges manufacturing overhead to products by using a predetermined application rate, computed on the basis
puteri [66]

Answer:

See below

Explanation:

First, we need to get the predetermined rate

Predetermined rate = Cost of manufacturing overhead / Cost driver

= $1,800,000/60,000

= $30

We will now calculate the application.

Actual labor hours × rate

= 61,500 × $30

= $1,845,000

We will now compare actual with overhead cost

= Applied Overhead cost - Actual manufacturing overhead

= $1,845,000 - $1,810,000

= $35,000

The above is an over application of overhead cost because the cost applied exceed the actual cost.

5 0
2 years ago
Advanced Enterprises reports year−end information from 2019 as​ follows: Sales​ (160,250 units) ​$969,000 Cost of goods sold ​(6
Ilya [14]

Answer:

Cost of goods sold = $576,900

Explanation:

The budgeted cost of goods sold will be the sales volume in 2020 multiplied by cost per unit .

Sales volume in year 2020= (100-10)% ×  sales figure for 2019

                                            = 90% × 160,250=  144,225  

Cost of goods sold per unit =  cost of goods sold in 2019/Sales units in 2019

                                              = 641,000/160250=$4

Cost of goods sold =  $4× 144,225 =  $576,900

Cost of goods sold = $576,900

3 0
3 years ago
Karen and Al obtained a 30-year fixed-rate, fully amortized loan when they purchased their home. Which statement is true
murzikaleks [220]

Based on the information given regarding the mortgage, the true statement will be that each of their payments is for the same amount.

A fully amortized payment simply means a payment where the individual makes every payment according to the schedule of the loan.

A fully amortized payment is a periodic repayment of a debt. Since Karen and Al obtained a 30-year fixed-rate fully amortized loan when they purchased their home, they'll pay the same amount monthly.

Learn more about mortgage on:

brainly.com/question/1318711

5 0
2 years ago
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