On July 1, Sanders, Inc

question 36

Essay

On July 1, Sanders, Inc. borrowed $12,000 from another company on a 12%, one-year note. Prepare the journal entries to record the note on July 1 and to accrue interest on December 31.

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Definitions:

Standard Cost System

An accounting system that estimates the cost of products in advance, using standard rates for materials and labor.

Direct Labor-Hours

The hours worked by employees directly involved in manufacturing goods, which is used as a basis for assigning labor costs to products.

Fixed Manufacturing Overhead

The portion of total manufacturing overhead costs that remains constant regardless of the level of production or activity volume.

Raw Material

Fundamental substances utilized during the manufacturing process to create products.