201 FS 14 Challenging Financial Accounting--Key

201 FS 14 Challenging Financial Accounting--Key - 1 March...

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1. March Corporation began operations on July 1 Year 4. Its fiscal year end is December 31. On July 1, the company signed a 5-year 10% note with Bankers Trust for $100,000. The company correctly recorded the transaction by debiting Cash and crediting Notes Payable on July 1. At December 31, the company has made no additional journal entries. Perform a transaction analysis. As of December 31, are assets, liabilities and equities correct, over-stated or understated? a. everything is correct b. assets are correct; liabilities are overstated $10,000; equities are understated $10,000 c. assets are correct; liabilities are understated $10,000; equities are overstated $10,000 d. assets are correct; liabilities are understated $5,000; equities are overstated $5,000 e. none of the above 2. March Corporation began operations on July 1 Year 4. Its fiscal year end is December 31. On July 1, the company signed a 5-year 10% note with Bankers Trust for $100,000. The company correctly recorded the transaction by debiting Cash and crediting Notes Payable on July 1. At December 31, the company has made no additional journal entries. What entry, if any, should March Corporation make on December 31 to correct its books? a. no entry is necessary b. debit interest expense $5,000; credit accrued interest payable $5,000 c. debit interest expense $10,000; credit accrued interest payable $10,000 d. debit accrued interest payable $5,000; credit interest expense $5,000 e. debit accrued interest payable $10,000; credit interest expense $10,000 f. none of the above 3. At the beginning of the year Proresp, Inc accountants gathered the information below: Total Assets = $500,000;
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This note was uploaded on 03/12/2010 for the course ACCY 201 taught by Professor Susancurtis during the Fall '09 term at University of Illinois, Urbana Champaign.

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201 FS 14 Challenging Financial Accounting--Key - 1 March...

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