BB Had Previously Purchased Inventory from L Wong for $15

question 38

Multiple Choice

BB had previously purchased inventory from L Wong for $15 000. On 1 October BB gave Wong a 60-day, bill of exchange to cover the amount of the account payable plus interest at 9% p.a. What is the correct accounting entry in BB's books to record the issue of the bill?

• A) Debit accounts payable $15 000; debit unexpired interest $222; credit bills payable $15 222
• B) Debit accounts payable $15 000; credit bills payable $15 000
• C) Debit bills payable $15 222; credit accounts payable $15 222
• D) Debit bills payable $15 000; debit unexpired interest $222; credit accounts payable $15 222

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Definitions:

Standard Hours Allowed

The predetermined amount of time expected to be required to produce a certain quantity of output under normal working conditions.

Actual Output

The real quantity of goods or services produced by a business during a specific period, as opposed to planned or potential output.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of materials that were expected to be used.

February

The second month of the year in the Gregorian calendar, known for having 28 days in common years and 29 days in leap years.