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1)Choi Corp has 1 million outstanding common shares and on September 25, Choi Corp declares to pay $1 cash dividend to shareholders on October 25
1)Choi Corp has 1 million outstanding common shares and on September 25, Choi Corp declares to pay $1 cash dividend to shareholders on October 25. Which of the following accounting is correct for September 25? *
Cash credit 1 million
Retained Earning credit 1 million
Cash debit 1million
Retained Earnings debit 1 million
2)
Company purchases $55,000 merchandise inventory and pays $5,000. Which of the following is true for the accounting of this transaction?
Accounts Payable credit $50,000
Merchandise Inventory debit $50,000
Accounts Payable debit $5,000
Cash debit $5,000
3)
Meek Corporation acquires a building at $32,000 for an estimated useful life of 20 years. Meek estimates the building will have $12,000 residual value at the end of 20 years. Meek uses double declining balance method for depreciation. What's the depreciation expense at the end of second year? *
$1,680
$3,000
$2,880
$1,500
4)
At the end of September, $200,000 salaries of the personnel accrued but not pay yet is credit to:
Salaries Payable
Cash
Accounts Payable
Salaries Expense
5)
A consultant collects $1,000 consultancy fee in advance. The correct entry is here: *
Debit Cash $1,000 and credit Unearned Revenue $1,000
Debit Accounts Receivable and credit Service Revenue $1,000
Debit Accounts Receivable $1,000 and credit Unearned Revenue $1,000
Debit Cash $1,000 and credit Service Revenue $1,000
Expert Solution
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2)Option 1 is the correct answer i.e. Accounts Payable credit $50,000
Explanation:
| Account Title | Debit | Credit |
| Merchandise inventory | $ 55,000 | |
| Cash | $ 5,000 | |
| Account payable | $ 50,000 |
3)
| Correct Option C i.e. $2,880 | |||||
| Calculation of depreciation by double declining balance method | |||||
| Annual Depreciation by SLM = (32000 - 12000)/ 20 | |||||
| =1000 | |||||
| SLM Depretiation Rate = 1000/(32000 - 12000)*100 | |||||
| =5% | |||||
| Depreciation rate for Double Declining balance method = 5%*2 i.e. 10% | |||||
| Year | Opening Carrying Value | Depreciation Expense | Accumulated Depreciation | Carrying Value | |
| Year 0 | 32000 | ||||
| Year 1 | 32000 | 3200 | 3200 | 28800 | |
| Year 2 | 28800 | 2880 | 6080 | 25920 |
4)
Accrued salaries - Journal entry
Debit Credit
Salaries expense $ 200,000
Salaries payable $ 200,000
So, credit is to Salaries payable account. Accrued salaries is a current liability.
5)
The correct entry to record advance receipt of consultancy receipt is:
Cash 1000
To unearned service revenue. 1000
As the cash is received so cash a/c is Debited and service yet to be provided so unearned service revenue a/c is credited.
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