Prior to Making Any Adjusting Entries, Terra Corporation Had Net

question 30

Multiple Choice

Prior to making any adjusting entries, Terra Corporation had net income of $155,100. The following adjusting entries were made: salaries payable, $1,574; interest earned on short-term investments but not yet recorded or collected, $7,268; adjustment to prepaid insurance for $5,538 for an insurance policy that expired during the period; and fees of $586 collected in advance that have now been earned. After recording these adjustments, net income would be

• A) $170,084
• B) 158,008
• C) 155,842
• D) 155,836

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Definitions:

Yield To Maturity

Yield to maturity is the total return anticipated on a bond if it is held until its maturity date, including all interest payments and the repayment of principal.

Coupon Rate

Yearly interest payment on a bond, specified as a percentage of its listed value.

Bond Prices

Bond prices are the market value of bonds, which can fluctuate based on interest rate changes, credit risk, and other factors.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, which can influence economic activity by encouraging or discouraging spending and investment.