A company raised $50,000 in cash by taking a one-year loan of $10,000

31.A company raised $50,000 in cash by taking a one-year loan of $10,000 and a 5-year loan of $40,000. Which of the following is the correct journal entry to record this transaction?

                       

Debit short-term debt $40,000; debit retained earnings $10,000; credit cash $50,000

                       

Debit short-term debt $50,000; credit cash $50,000

                       

Debit cash $50,000; credit long-term debt $50,000

                       

Debit cash $50,000; credit short-term debt $10,000; credit long-term debt $40,000

 

 

32.Which one of the following statements describes the rules about posting transactions into T-accounts in the ledger?

                       

For assets, debits are entered on the left; for liabilities, credits are entered on the left

                       

For assets, credits are entered on the left; for liabilities, debits are entered on the left

                       

Debits on the left; credits on the right

                       

Credits on the left; debits on the right

 

 

33.Baxtra, Inc. pays $20,000 in cash as interest to its lenders during 2005. According to U.S. GAAP, in which section of the statement of cash flows would this payment be included?

                       

The operating section

                       

The financing section

                       

The investing section

                       

Depends on whether cash flow statement is direct or indirect method.

 

 

34.Taylor Company had a salaries payable balance of $18,000 on December 31, 2004. During 2005, it paid $50,000 in cash as salaries, and recorded a salary expense of $50,000. Its December 31, 2005 salaries payable balance is:

                       

$50,000

                       

$18,000

                       

$100,000

                       

Cannot be determined from the information provided

 

 

35.On April 30, 2005, Zono Electronics, Inc. made a payment of $3,500 to Imperial Distributors, a supplier. Choose the statement that best describes the recording of this financial transaction by Imperial Distributors.

                       

Debit cash $3,500; credit accounts payable $3,500

                       

Debit accounts receivable $3,500; credit cash $3,500

                       

Debit accounts payable $3,500; credit cash $3,500

                       

Debit cash $3,500; credit accounts receivable $3,500

 

 

36.Sardi Company estimates its 2005 tax expense to be $80,000. It makes a cash payment of $20,000 to the tax authorities on December 31, 2005. How should this transaction be recorded by Sardi?

                       

Debit tax expense $80,000; credit cash $60,000; credit taxes payable $20,000

                       

Debit tax expense $80,000; credit cash $20,000; credit taxes payable $60,000

                       

Debit tax expense $80,000; credit cash $20,000

                       

Debit tax expense $80,000; credit cash $20,000; credit accounts payable $60,000

 

37.On June 1, 2005, Planet Music has accounts payable of $45,000. During the month, debits of $3,000 and credits of $11,000 were made to the account. At the end of June 2005, what was the accounts payable balance?

                       

A credit balance of $53,000

                       

A debit balance of $42,000

                       

A credit balance of $56,000

                       

A debit balance of $53,000

 

 

38.Barnaby & Sons receives a large shipment of goods from its supplier. It pays $58,000 at the time of delivery and promises to pay the remaining $42,000 within the next two months. What is appropriate journal entry for this transaction?

                       

Debit cash $42,000; debit inventory $16,000; credit accounts payable $58,000;

                       

Debit inventory $100,000; credit cash $58,000; credit accounts payable $42,000

                       

Debit accounts payable $58,000; credit cash $42,000; credit inventory $16,000

                       

Debit accounts payable $58,000; debit cash $42,000; credit inventory $100,000

 

 

39.Annie’s Fitness sells a set of free weights to a customer for $1,000. The customer pays $600 in cash and puts the rest on her store credit account. Which one of the following statements describes the most appropriate accounting for the transaction?

                       

Debit cash $600; debit accounts receivable $400; credit cost of good sold $1000

                       

Debit cash $600; debit accounts receivable $400; credit revenues $1,000

                       

Debit revenues $1,000; credit cash $600; credit accounts receivable $400

                       

Debit cash $600; debit accounts receivable $400; credit inventory $1,000

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