Cannon Ltd Bought Display Racks with a Fair Market Value

question 122

Multiple Choice

Cannon Ltd bought display racks with a fair market value of $150,000.The corporation signed a 3-year interest-bearing note at 8%.The entry to record the transaction would include

• A)A debit to Notes Payable for $150,000
• B)A debit to Interest Expense for $12,000
• C)A credit to Notes Payable for $150,000
• D)A credit to Interest Payable for $400
• E)A credit to Notes Payable for $39,692

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Definitions:

Gross Sales

The total sales revenue of a company without any deductions for returns, allowances, or discounts.

Indirect Advertising Costs

Expenses related to advertising that are not directly associated with a specific advertising medium or campaign, such as salaries of marketing staff or overhead costs.

Allocated

The process of apportioning resources, costs, or expenses to specific projects, departments, or cost centers.

Gross Sales

The total sales revenue of a business before any deductions are made for returns, allowances, and discounts.