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Scilla [17]
3 years ago
9

Ace Bonding Company purchased merchandise inventory on account. The inventory costs $3,700 and is expected to sell for $6,400. H

ow should Ace record the purchase? Inventory 3,700 Accounts payable 3,700 Cost of goods sold 3,700 Deferred sales revenue 2,700 Sales in advance 6,400 Cost of goods sold 3,700 Inventory payable 3,700 Cost of goods sold 3,700 Profit 2,700 Sales payable 6,400
Business
1 answer:
snow_lady [41]3 years ago
7 0

Answer:

Ace records the purchase:

Inventory 3,700 Accounts payable 3,700

Explanation:

Ace Bonding Company purchased merchandise inventory on account. The inventory costs $3,700.

Following the Accrual accounting - an accounting method that revenue or expenses are recorded when a transaction occurs rather than when payment is received or made. At that time of purchasing, the company has not sold the merchandise yet. The entry records the purchase:

Debit Inventory $3,700

Credit Accounts payable $3,700

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How can the government promote industrial development in south africa?​
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2 years ago
Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $250 million of 8% bonds, dated January 1, on January 1, 2
stealth61 [152]

Answer:

A. 1-Jan-21

Dr Investment in Bond $250

Cr Cash $228

Cr Discount on bond investment $22

30-Jun-21

Dr Cash $10

Dr Discount on bond investment $1.40

Cr To Interest revenue $11.40

31-Dec-21

Dr Cash $10

Dr Discount on bond investment $1.47

Cr Interest revenue $11.47

B. $240 million

C. In Million)

31-Dec-21

Dr Fair value adjustment $9.13

Cr Unrealized holding gain or loss - NI $9.13

D. Net cash flow from operating activities= $208 Outflow

Cash flow from investing activities=$0.00

Explanation:

a. Preparation of the relevant journal entries on the respective dates.

1-Jan-21

Dr Investment in Bond $250

Cr Cash $228

Cr Discount on bond investment $22

($250-$228)

(Being to record the investment in bond )

30-Jun-21

Dr Cash $10

($250 * 8% * 6/12)

Dr Discount on bond investment $1.40

($11.40-$10)

Cr To Interest revenue $11.40

($228*10%*6/12)

(Being to record revenue recognition for bond interest and discount amortized)

31-Dec-21

Dr Cash $10

($250 * 8% * 6/12)

Dr Discount on bond investment $1.47

($11.47-$10)

Cr Interest revenue $11.47

($229.40*10%*6/12)

(Being to record revenue recognition for bond interest and discount amortized)

b. Calculation for what amount will Fuzzy Monkey report its investment in the December 31, 2016, balance sheet

Based on the information given we were told that the fair value of the bonds at December 31, 2021, was the amount of $240 million which means that the amount that Fuzzy monkey will report its investment on December 31, 2021 balance sheet will be the fair value amount of $240 million

c. Preparation of any entry necessary to achieve this reporting objective

(In Million)

31-Dec-21

Dr Fair value adjustment $9.13

($240 - $228 - $1.40 - $1.47)

Cr Unrealized holding gain or loss - NI $9.13

(Being to record adjusting entry to record investment at fair value)

d. Calculation for How would Fuzzy Monkey's 2016 statement of cash flows be affected by this investment

STATEMENT OF CASH FLOW (Partial) For 2021

(In million)

Cash flow from operating activities

Short term investment $228

Less: Interest received ($20)

Net cash flow from operating activities $208 Outflow

Cash flow from investing activities $0.00

6 0
3 years ago
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