Miley Block Is a Building Consultant

question 197

Essay

Miley Block is a building consultant. Shown below are (a) several accounts in her ledger with each account preceded by an identification number, and (b) several transactions completed by Block. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.
$\begin{array}{l}\begin{array} { l | l | r | l } { \text { 1. } } & \text { Accounts Payable } & \text { 7. } & \text { Telephone Expense } \\\hline \text { 2. } & \text { Accounts Receivable } & 8 . & \text { Unearned Revenue } \\\hline 3 . & \text { Cash } & 9 . & \text { Miley Block, Capital } \\\hline 4 . & \text { Consulting Fees Earned } & 10 . & \text { Miley Block, Withdrawals } \\\hline 5 . & \text { Office Supplies } & 11 . & \text { Insurance Expense } \\\hline 6 . & \text { Office Supplies Expense } & 12 . & \text { Prepaid Insurance }\end{array}\\\begin{array} { l | l | c | l } & & \text { Debit } & \text { Credit } \\\hline & \text { Example: } & 2 & 4 \\\hline & \begin{array} { l } \text { Completed consulting work for a client } \\\text { who will pay at a later date. }\end{array} & & \\\hline \text { A. } & \begin{array} { l } \text { Received cash in advance from a } \\\text { customer for designing a building }\end{array} & & \\\hline \text { B. } & \text { Purchased office supplies on credit. } & & \\\hline \text { C. } & \text { Paid for the supplies purchased in B. } & & \\\hline\end{array}\end{array}$
$$\begin{array} { l | l | l | l } \hline \text { D. } & \begin{array} { l } \text { Received the telephone bill of the } \\\text { business and immediately paid it. }\end{array} &\quad\quad &\quad\quad \\\hline \text { E. } & \text { Paid for a 3-year insurance policy } & &\end{array}$$

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Definitions:

Conversion Value

The financial value of converting an investment from one form to another, often used in the context of convertible securities.

Straight Bond Value

The present value of a bond's future interest payments and its principal amount at maturity, assuming it does not have any embedded options.

Intrinsic Value

The actual, inherent value of a financial asset, determined through fundamental analysis without reference to its market value.

American Call Option

An option contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a predetermined price before or on a specified date.