Question

AA signed a note payable for the cleaning service provided by DD (principal: $10,000, interest rate 12%, time 3 months). At the end of the 1^st month, AA needs to record adjusting entries for accrued interest. How much is the accrued interest at the end of the 1^st month?

At the beginning of accounting period AA had beginning inventory of $10,000. At the end of this accounting period, AA found that they have $20,000 as ending inventory. During this accounting period, Cost of Goods Sold was $45,000. How much is inventory turnover ratio?

AA provided service ($60,000) to CC and received a note (Principal $60,000, interest rate 12%, time 2 months). At the end of the 1^st month, AA needs to record adjusting entries for accrued interest. The journal entry should be a debit                            [ Select ]                       ["Interest Expense $1,200", "Interest Expense $600", "Interest Receivable $600", "Interest Receivable $1,200"]         and a credit                            [ Select ]                       ["Interest Payable $1,200", "Interest Payable $1,200", "Interest Income $1,200", "Interest Income $600"]         .

Answer 1

1. Accrued interest = 10,000*12%*1/12 = $100
2. Inventory Turnover = Cost of Goods Sold/Average inventory = 45,000/[(10,000+20,000)/2] = 3
3. Debit : Interest receivable 600 Credit : interest revenue 600 (60,000*12% 1/12)