On April 12, Hong Company Agrees to Accept a 60-Day

question 144

Multiple Choice

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account.
- What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

• A) Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500.
• B) Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425.
• C) Debit Notes Payable $4,500; debit Interest Expense $75; credit Cash $4,575.
• D) Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500.
• E) Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612.

Analyze the effects of bond transactions and premium amortization on financial statements.

Understand the tax implications on financial statements and consolidated reporting.

Understand the principles of consolidation financial statements, including the elimination of intercompany transactions.

Comprehend the effects of subsidiary transactions on non-controlling interest.

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Definitions:

Pus

A thick, yellowish or greenish opaque liquid produced in infected tissue, consisting of dead white blood cells and bacteria with tissue debris and serum.

Posterior Wall

The back side of a body cavity or an anatomical structure.

Larynx

The voice box located in the throat, responsible for producing sound, protecting the airway during swallowing, and regulating breathing.

Collapsed Lung

A condition where air escapes from the lung into the chest cavity, causing the lung to collapse.