Question

Principles of Accounting I

Quiz 11

#17

The journal entry used to record the issuance of a discounted note for the purpose of borrowing funds for the business is

a. debit Notes Payable; credit Cash

b. debit Accounts Payable; credit Notes Payable

c. debit Cash and Interest Payable; credit Notes Payable

d. debit Cash and Interest Expense; credit Notes Payable

#24

During its first year of operations, a company granted its employees vacation privileges and pension rights estimated at a cost of $24,178 and $15,400, respectively. The vacations are expected to be taken in the next year, and the pension rights are expected to be paid in the future 5-30 years. What is the total cost of vacation pay and pension rights to be recognized in the first year?

a. $15,400

b. $39,578

c. $24,178

d. $70,378

I missed both of these on a quiz. What is the correct answer and solution. Thank you

Answer 1

17

The journal entry used to record the issuance of a discounted note for the purpose of borrowing funds for the business is Debit Cash and Interest Expense; credit Notes Payable

Option D is correct

24

Under the accrual basis, cost of vacation pay and pension rights are to be recognized in the year in which they accrue

Total cost of vacation pay and pension rights to be recognized in the first year = 24178+15400= $39578

Option B is correct