Answer:
Last Fiscal Year:
Interest Expense = $5550
Current Fiscal Year:
Interest Expense = $11100
Explanation:
According to the accrual basis of accounting, the expenses and revenues relating to a certain period should be recorded in that particular period whether of not they have been received. The fiscal year of Kieso ends on 31 December and as the loan was taken one month prior to the start of the current fiscal year, it was taken at the start of December of last fiscal year.
This means that the interest expense on loan relating to last December will be charged to the last fiscal year and the interest expense relating to January and February will be charged to the current fiscal year. The interest expense amount will be calculated as follows,
Last Fiscal Year = 740000 * 9% * 1/12 => $5550
Current Fiscal Year = 740000 * 9% * 2/12 => $11100
Answer:
An increase in total liabilities and a decrease in stockholders' equity
Explanation:
When a dividend is declared but not ye paid, it is credited as current liability because it has increased the company liability while retained earnings is being Debited because of the profit distribution.
When it is eventually paid, cash account is credited while dividend liability account is debited.
Answer:
a. Cash 5,684 Sales discounts 116 , Accounts receivable 5,800
Explanation:
The journal entry is shown below:
Cash A/c Dr $5,684
Sales Discount A/c Dr $116
To Accounts receivable $5,800
(Being cash received recorded)
The computation of the account receivable
= $5,800
And, the discount would be
= Accounts receivable × percentage given
= $5,800 × 2%
= $116
The remaining amount would be credited to the cash account i.e $5,684 ($5,800 - $116)
Answer: B - beyond the control of either party to the escrow
Explanation: An Escrow account is a legal term used where funds are held in trust whilst two or more parties complete a transaction.
An Escrow is a trusted third party that will be in custody of the funds during the cause of the transaction and will be the one to pay the merchant after all the escrow agreement are fulfilled.
Escrow account reduces the risk of fraud by acting as a trusted third-party that collects, holds and only disburses funds when both Buyers and Sellers are satisfied. It apply mainly to real estate transactions.
Answer:
The correct answer is (A)
Explanation:
Average cost approach is utilised to analyse the average cost of inventory available for sale. There are various advantages of using average cost techniques, but at the same time it has few limitations. Average cost methods do not account for the cost variation in different level of outputs. Cost variation is important to account for as it can change the overall cost of estimations, and cost averages.
