Question

Moog Inc. issued $100,000 in bonds at a price of 102. Moog Inc. needs to record which of the following journal entries on the issuance date?

	a.	Dr. Cash                                    $102,000 Dr. Premium on Bonds Payable                 $2,000 Cr. Bonds Payable                                            $100,000
	b.	Dr. Bonds Payable                    $102,000 Cr. Discount on Bonds Payable             $2,000 Cr. Cash                                                 $100,000
	c.	Dr. Bonds Payable                    $102,000 Cr. Premium on Bonds Payable           $2,000 Cr. Cash                                                  $100,000
	d.	Dr. Cash                          $100,000 Dr. Discount on Bonds Payable             $2,000 Cr. Bonds Payable                               $102,000 Arthur's Hardware Company uses the weighted average cost method for copper plumbing connectors. The company purchased 1,600 connectors for $2 each on August 1, and 2,000 connectors for $1.50 each on September 1. Arthur's sold 1,450 connectors for $4 each on November 15. What is the company's cost of goods sold? a. $2,175. b. $2,537. c. $2,494 d. $2,900. Rich Products Inc. issued 50,000 shares of common stock with a par value of $1 per share. On July 1, the company bought back 1,500 shares from investors for $70 per share. On August 1, the company reissued the 1,500 shares at a price of $75 per share. Rich Products should record which of the following entries: a. Dr. Treasury Stock    $105,000    Cr. Cash    $105,000 b. Dr. Cash    $105,000 Dr. Additional Paid-in Capital         $7,500    Cr. Treasury Stock    $112,500 c. Dr. Treasury Stock $1,500 Dr. Additional Paid-In Capital    $103,500    Cr. Cash     $105,000 d. Dr. Cash    $112,500 Cr. Treasury Stock            $105,000    Cr. Additional Paid-in Capital     $7,500 Buffalo Punch and Die Inc. manufactures punches and dies used in various manufacturing processes. The company currently has 2,000 dies in inventory at $16 per unit. The market value of the dies is $18 per unit. The company recently lowered the selling price on its punch tools from $20 per unit to $19 per unit. Buffalo Punch and Die Inc. should report the inventory on its balance sheet at what amount? a. $28,000. b. $30,000. c. $40,000. d. $32,000. Cottage Crafts Company uses the percent of credit sales method to record bad debt expense. The following information was recorded in the shop's general ledger for January: Cash sales - $120,000 Credit sales - $97,000 Balance in the Allowance for Doubtful Accounts - $1,350 (credit balance) Historical bad debt loss rate - 1% What is the balance in the Allowance for Doubtful Accounts after recording Bad Debt Expense for the month of January? a. $1,200. b. $230. c. $2.320. d. $380.

Answer 1

answer one

for recording issue of bonds

cash is increasing hence a debit is made to cash.

as bond issued is a liability hence a credit increases the liability.

a discount on bond issue is an expense hence it is debited.

so the journal entry should be

Dr. Cash $100,000

Dr. Discount on bonds payable $2,000

Cr. Bonds Payable $102,000

Answer is option D.

question 2

Average cost per unit = total amount of purchases/units purchased

= (1600*2)+(2000*1.5)/1600+2000

= 3200+3000/3600

=6200/3600

average cost per unit = $1.72

units sold 1450

cost of goods sold = units sold * average cost per unit

Cost of goods sold = 1450 * $1.72

Cost of goods sold = $2494

Hence option c is correct

question 3

recording buy back of share results in decrease of cash hence cash is credited.

As capital is decreasing treasury stock account is debited to decrease the capital account with the amount of treasury stock. i.e 1500*70

hence the journal entry should be

Dr. Treasury stock $105,000

Cr. cash account $105,000

Hence answer is (A)

Question 4

The inventory in the balance sheet should be recorded at the lower of cost or market value

the market value being 18

The cost is $16

Hence the inventory should be recorded at $16

number of units = 2000

value of inventory = 2000 * $16

hence value of inventory to be recorded in the balance sheet = $32000

Hence answer is D