Question

On 1 October, Simon’s Solar Service borrows $150,000 from Statewide Bank on a 3
month, 4% note. What accrual entry must Simon’s Solar Service make on 31 December before financial statements are prepared?
(Apologies that the journal entry is not formatted correctly)

Group of answer choices

Dr Interest Expense 1,500; Cr Interest Payable 1,500

Dr Interest Payable 1,500; Cr Interest Expense 1,500

Dr Interest Expense 6,000; Cr Interest Payable 6,000

Dr Interest Expense 1,500; Cr Notes Payable 1,500

On 1 October, Simon’s Solar Service borrows $150,000 from Statewide Bank on a 3
month, 4% note. Interest was accrued on 31 Dec when financial reports were prepared. The entry by Simon’s Solar Service to record payment of the note and accrued interest on 1 January is:
(Apologies that the journal entry is not formatted correctly)

Group of answer choices

Dr Notes Payable 150,000, Dr Interest Expense 1,000; Cr Cash 151,000

Dr Notes Payable 150,000, Dr Interest Payable 4,000; Cr Cash 154,000

Dr Notes Payable 151,000; Cr Cash 151,000

Dr Notes Payable 150,000, Dr Interest Payable 1,500; Cr Cash 151,000

On 1 January 2016 Bradley Ltd, whose balance date is 31 Dec, issued $200,000 of notes payable of which $50,000 is due on 1 January for each of the next four years. The proper statement of financial position for presentation on 31 December 2016 is:

Group of answer choices

Current Liabilities, $200,000

Current Liabilities, $50,000; Non-current liabilities, $150,000

Current Liabilities, $150,000; Non-current liabilities, $50,000

Non-current Liabilities, $200,000

The face value of a note is also known as the:

Group of answer choices

market value.

trading value.

unsecured amount.

principal.

Obligations to pay for goods or services that have been provided but for which a supplier’s invoice has not yet been received are recorded as:

Group of answer choices

accounts payable.

debentures.

contingencies.

warranties.

Warranty obligations are classified as provisions because the:

Group of answer choices

future cost of repairs is known with certainty.

cost of future servicing is not able to be estimated reliably.

amount of future claims is uncertain.

amount of the future sacrifice is certain.

Vagabond Ltd manufactures handbags and provides a six-month quality warranty. The provision for warranty account has a credit balance of $50,000 and the estimated future obligations for warranty work is $190,000. The adjustment necessary to update the provision account is a:

Group of answer choices

debit of $140,000.

credit of $240,000.

credit of $140,000.

debit of $240,000.

A quick ratio is a measure of an entity’s:

Group of answer choices

short-term liquidity.

quickness at paying creditors.

medium-term liquidity.

long-term liquidity.

Previous

Answer 1

1. a. Dr Interest Expense 1,500; Cr Interest Payable 1,500

(150,000 *4% *3/12 = $1500)

2. c. Dr Notes Payable 150,000, Dr Interest Payable 1,500; Cr Cash 151,000

3. b. Current Liabilities, $50,000; Non-current liabilities, $150,000

$50,000 will pe paid this year so it is current liability and remaining $150,000 will be paid after 12 months so Non current liability.

4. d. principal.

Face value of note is the principal amount of the note.

5. a. accounts payable.

Accounts payable are the obligation to pay for goods and services obtained.

6. c. amount of future claims is uncertain.

A provision is a liability of uncertain timing or amount.

7. c. credit of $140,000.

A credit in warranty provision account will increase warranty provision balance.

8. a. short-term liquidity.

A quick ratio is a measure of an entity’s short-term liquidity.

Please give positive rating.