Accountants must adhere to generally accepted accounting principles for depreciation. There are four methods for depreciation straight line, declining balance, sum-of-the-years’ digits and unit of production
Answer:
III. maximize profit.
Explanation:
Profit maximisation is assumed to be the most important goal of most firms. Profit maximization means selling a product at the point where total revenue is at its greatest above total cost.
Profit is maximised where marginal cost equals marginal revenue.
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Answer:
B) $3271.
Explanation:
Since Sheridan Company uses the effective interest method to account for Scott Company bonds, and it purchased them on discount, it must increase its debt investments by:
(market price x effective interest) - (face value x coupon rate) =
($1,650,375 x .055) - ($1,750,000 x .05) = $3,270.63 ≈ $3,271
since the bonds pay a semiannual coupon, the yearly interest rates must be divided by 2.
Answer:
Dr. Cash $250,000
Cr. Bond Payable $250,000
Explanation:
Bonds issued are the liabilities for the company because it company received cash against the bonds which will be paid at maturity along with the interest.
As cash is an asset and it is being received, to increase the value of cash balance we debited the cash account. The bond is a liability and to add a value in a liability account we need to credit the bond payable account.
