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.

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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nterest on loans 1036 Interest on cash credits 892 Discount on bills discounted 780 Interest on overdrafts 216 Interest on savings Bank 440 Interest on fixed deposits 1100 From the above information, the total amount of interest earned and the interest expended will be: a. Interest earned RO: 1824, Interest expended RO: 2640 b. Interest earned RO: 2624, Interest expended RO: 1560 c. Interest earned RO: 2924, Interest expended RO: 1540 d. Interest earned RO: 2824, Interest expended RO: 1640
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