If a fixed asset, such as a computer, were purchased on January 1 st for dollar

Question

If a fixed asset, such as a computer, were purchased on January 1 st for dollar 3,750 with an estimated life of 3 years and a salvage or residual value of dollar 150, the journal entry for monthly expense under straight-line depreciation is: (Note: EOM indicates the last day of each month.) One potential advantage of financing corporations through the use of bonds rather than common stock is the interest on bonds must be paid when due a higher earnings per share is guaranteed for existing common shareholders the corporation must pay the bonds at maturity the interest expense is deductible for tax purposes by the corporation Alma Corp. issues 1,000 shares of dollar 10 par value common stock at dollar 16 per share. When the transaction is recorded, credits are made to: Common Stock dollar 10,000 and Retained Earnings dollar 6,000. Common Stock dollar 10,000 and Paid-in Capital in Excess of Stated Value dollar 6,000. Common Stock dollar 10,000 and Paid-in Capital in Excess of Par Value dollar 6,000. Common Stock dollar 16,000. Grayson Bank agrees to lend the Trust Company dollar 100,000 on January 1. Trust Company signs a dollar 100,000, 8 percentage, 9-month note. The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is:

Explanation / Answer

(1) - c

Depreciation Expense 1,200

To, Accumulated Depreciation 1,200

(9) -d The interest expense is deductible for tax purpose by corporation

(20) -c Credit 10,000 to Common Stock and 6,000 to paid-in capital excess to par value

(21) - c

Cash................100,000

To, Notes Payable 100,000

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