Pink Stamp Chop Trading provided the following interest expense account. Interest expense account (a) 2020 (b) Jan 1 Aug 4 Oct 9 Dec 31 Interest payable Cash at bank Prepaid interest Income summary Dr $ 745 Cr $ 300 120 325 The business hopes to increase its cash balance for expansion but does not wish to incur additional interest expense on long-term borrowings. It is considering other options of increasing its cash balance without borrowing from the bank. REQUIRED Bal $ 300 Cr 445 Dr 325 Dr Interpret the entries on the following dates. (i) 1 January (ii) 4 August (iii) 9 October Suggest and explain four ways in which a business can increase its cash balance aside from securing long-term borrowings.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Pink Stamp Chop Trading provided the following interest expense account.
Interest expense account
(a)
2020
Jan 1
Aug 4
Oct 9
Dec 31
(b)
Interest payable
Cash at bank
Prepaid interest
Income summary
Dr $
745
Cr $
300
120
325
The business hopes to increase its cash balance for expansion but does not wish to incur
additional interest expense on long-term borrowings. It is considering other options of
increasing its cash balance without borrowing from the bank.
REQUIRED
Bal $
300 Cr
445 Dr
325 Dr
Interpret the entries on the following dates.
(i) 1 January
(ii) 4 August
(iii) 9 October
Suggest and explain four ways in which a business can increase its cash balance
aside from securing long-term borrowings.
Transcribed Image Text:Pink Stamp Chop Trading provided the following interest expense account. Interest expense account (a) 2020 Jan 1 Aug 4 Oct 9 Dec 31 (b) Interest payable Cash at bank Prepaid interest Income summary Dr $ 745 Cr $ 300 120 325 The business hopes to increase its cash balance for expansion but does not wish to incur additional interest expense on long-term borrowings. It is considering other options of increasing its cash balance without borrowing from the bank. REQUIRED Bal $ 300 Cr 445 Dr 325 Dr Interpret the entries on the following dates. (i) 1 January (ii) 4 August (iii) 9 October Suggest and explain four ways in which a business can increase its cash balance aside from securing long-term borrowings.
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