E4-5 key - Chapter 5 1 CHAPTER 4 PROBLEM 4-5 ANSWER KEY...

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Chapter 5 1 CHAPTER 4 PROBLEM 4-5 – ANSWER KEY E4–5(E4-1) (1) This financial event does not have accounting significance. Entries are made to record financial events that affect the company's current financial condition. In this case, the new contract will affect the company's future financial condition by affecting the dollar value of future events as the new contract is implemented. Simply signing the contract does not affect the company's current financial position. (2) This financial event does have accounting significance. The receipt of cash in exchange for issuing debt affects the company's current financial position by increasing both the amount of cash the company has and the obligations the company has to other entities. Thus, an entry is necessary, and the entry would be: Cash (+A). ................................................................................ 200,000 Bonds Payable (+L). .......................................................... 200,000 Issued bonds . (3) This event does not have accounting significance. The retirement of an official does not
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This note was uploaded on 09/26/2010 for the course BUSINESS ACG 6025 taught by Professor Karenlivingstone during the Fall '10 term at University of South Florida.

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E4-5 key - Chapter 5 1 CHAPTER 4 PROBLEM 4-5 ANSWER KEY...

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