Question

Violet Company borrowed $30,000 from First Federal Bank on 9/1/16. The note carried a one-year term and a 4% interest rate. The amount of interest expense appearing on the 2017 income statement would be:

1.

1600

2.

800

3.

27,600

4.

2,400

5.

None of the above

The following is a random list of the accounts of Gregory Company:

Cash	$820		Common Stock	$2,100
Accounts Payable	950		Land	1,800
Accounts Receivable	2,850		Allowance for Doubtful Accts	1,000
Prepaid Rent	750		Retained Earnings	1,820

              

                If these accounts were presented in a trial balance, the total of the credit column would be equal to:

1.

$4,870.

2.

$3,770.

3.

$5,870.

4.

$4,050.

Assume the perpetual inventory method is used.

1) Fox Company purchased merchandise inventory that cost $8,000 under terms of 2/10, n/30 and FOB shipping point.
2) The merchandise was purchased with freight terms FOB shipping point of $500. 3) Payment was made to the supplier within 10 days.
4) All of the merchandise was sold to customers on account for $12,000 and delivered under terms FOB shipping point with freight cost amounting to $600.

The amount of cash paid by Fox in event 3 was:

	1.	$8,500
	2.	$8,000
	3.	$160
	4.	$8,340
	5.	$7,840

Answer 1

Solution:-a. Violet Company borrowed $30,000 from First Federal Bank on 9/1/16. The note carried a one-year term and a 4% interest rate. The amount of interest expense appearing on the 2017 income statement would be:-4. 2,400b. If these accounts were presented in a trial balance, the total of the credit column would be equal to:-3. $5,870Explanaiton:-950 + 2,100 + 1,000 + 1,820= $5,870c. The amount of cash paid by Fox in event 3 was:-4. $8,340Explanation:-(8,000 - 2%) + 500= $8,340 amount of cash paid by