ACCY EXAM 4 QUESTIONS AND ANSWERS ALL CORRECT

ACCY EXAM 4 QUESTIONS AND
ANSWERS ALL CORRECT

Journal entry to find the sale of equipment - Answer- Dr. Cash
Dr. Accumulated Depreciation
Dr. if it's a loss
Cr. if it's a gain
Cr. Equipment

What account is bonds payable - Answer- liability

Journal entry of bond at par - Answer- Dr. Cash
Cr. Bonds Payable

Journal entry of bond at par issued at discount - Answer- Dr. Cash
Dr. Discount
Cr. Bonds Payable

Journal entry of bond at par issued at premium - Answer- Dr. Cash
Cr. Premium
Cr. Bonds Payable

Pros and Cons of Bonds - Answer- Pro: Not giving up ownership
Con: Interest

Pros and Cons of Equity - Answer- Pro: No interest and do not have to pay back
Con: Giving up ownership %

What makes a corporation a corporation? - Answer- If there are stockholders in the
company

Journal entry to record the company's issuance of shares and par values common stock
- Answer- dr. cash
cr. common stock
or
dr. cash
cr. common stock
cr. paid-in capital in excess of par

, What type of accounts are common stock and paid-in capital in excess of par - Answer-
Equity
A/R (accounts receivable) - Answer- Waiting to receive money
- if the customer isn't going to pay, you write off A/R as credit

Direct Write off - Answer- - Mom and pop store
- Wait until we know we won't collect, expense it

Journal Entries for Direct Write Off (3) - Answer- 1. Write off A/R
Dr Bad Debt Expense
Cr Accounts Receivable
2. Surprise! They paid (Reverse Write off)
Dr Accounts Receivable
Cr Bad Debt Expense
3. Collect money
Dr Cash
Cr Accounts Receivable

Allowance Method - Answer- - GAAP, Matching Principle
- Estimate how much we think we won't collect in the future, so expense it

Matching Principle - Answer- recognize expenses in the same period as the revenues
they help to generate

Journal Entries for Allowance Method (3) - Answer- 1. Write off A/R
Dr Allowance for Doubtful Accounts
Cr Accounts Receivable
2. Surprise! They paid (Reverse Write off)
Dr Accounts Receivable
Cr Allowance for Doubtful Accounts
3. Collect money
Dr Cash
Cr Accounts Receivable

What type of account is: Allowance for Doubtful Accounts - Answer- Contra-asset

2 ways to estimate ($)- Allowance Method - Answer- 1. % of sales method
2. % of A/R (allowance)

net realizable value of A/R equation - Answer- Accounts Receivable - Allowance for
Doubtful Accounts

I=PRT - Answer- Interest= principle x rate x time

Maturity Value definition - Answer- the amount of cash we're going to receive at maturity
or in 90 days