Blog

Periodic interest payments on bonds are determined by multiplying the par value of the bond by the contract rate.

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines’ second year depreciation under the straight-line method.

A company cannot have a liability if the amount of the obligation is unknown.

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

A lease is a contractual agreement between a lessor and a lessee that grants the lessee the right to use the asset for a period of time in return for cash payment(s) to the lessor.

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

Holding a copyright:

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.