Laura Diamonds Purchased a Computer for $3,600 on December 1

question 18

Multiple Choice

Laura Diamonds purchased a computer for $3,600 on December 1. It is estimated that the useful life of the computer will be 3 years. If financial statements are to be prepared on December 31, the company should make the following adjusting entry

• A) debit Depreciation Expense, $100; credit Computer, $100.
• B) debit Depreciation Expense, $100; credit Accumulated Depreciation, $100.
• C) debit Depreciation Expense, $1,200; credit Accumulated Depreciation, $1,200.
• D) debit Cash, $100; credit Accumulated Depreciation, $100.

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Definitions:

Privately Placed Bonds

Bonds that are sold directly to a small group of investors instead of being offered to the general public, often to avoid the costs and regulations of a public offering.

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a specified price before a certain date.

Employee Options

A form of employee benefit that gives employees the right to purchase company stock at a set price at a future date.