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QUESTION 2 For each of the following accounts, signify DEBIT or CREDIT to indicate the normal...

QUESTION 2

For each of the following accounts, signify DEBIT or CREDIT to indicate the normal balance of the account.

      -       A.       B.   

Interest expense
      -       A.       B.   

Bonds payable (mature in 6 months)
      -       A.       B.   

Bonds payable (mature in 3 years)
      -       A.       B.   

Discount on bonds payable (mature in 3 years)
      -       A.       B.   

Premium on bonds payable (mature in 3 years)
      -       A.       B.   

Interest payable (on semi annual bond interest payments)
      -       A.       B.   

Long term investments
      -       A.       B.   

Interest revenue
      -       A.       B.   

Dividend revenue
      -       A.       B.   

Market adjustment on long term investment (market value exceeds cost)
      -       A.       B.   

Market adjustment on long term investment (cost exceeds market value)
      -       A.       B.   

Unrealized gain (on long term investment)
      -       A.       B.   

Unrealized loss (on long term investment)
      -       A.       B.   

Earnings from long term investment (investee earns a net income)
      -       A.       B.   

Earnings from long term investment (investee earns a net loss)
Business   Accounting   
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Answer #1

Solution:

1. Interest expense - DEBIT

2. Bonds payable (mature in 6 months) - CREDIT

3. Bonds payable (mature in 3 years) - CREDIT

4. Discount on bonds payable (mature in 3 years) - DEBIT

5. Premium on bonds payable (mature in 3 years) - CREDIT

6. Interest payable (on semi annual bond interest payments) - DEBIT

7. Long-term investments - DEBIT

8. Interest Revenue - CREDIT

9. Dividend revenue - CREDIT

10. Market adjustment on long term investment (market value exceeds cost) - DEBIT

11. Market adjustment on long term investment (cost exceeds market value) - CREDIT

12. Unrealized gain (on long term investment) - Credit

13. Unrealized loss (on long term investment) - Debit

14. Earnings from long term investment (investee earns a net income) - Debit

15. Earnings from long term investment (investee earns a net loss) - Credit

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