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Investment:
It is a financial term which refers to spend or deposit money to get the financial benefits.
The different ways in which a firm can invest are mentioned below:
- Long-term investments
- Short-term investments
Short-term investments:
It includes such investments which are highly liquid in nature as these can be convert in form of cash easily during the period of 1 year.
It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.
Rules of Journal Entry:
The rules for journal entry are defined by 5 accounting components,
- Assets: Increase in asset should be debit and decrease should be credit.
- Liabilities: Increase in liabilities should be credit and decrease should be debit.
- Equity: Increase in Equity should be credit and decrease should be debit.
- Expense: Increase in expense should be debit and decrease should be credit.
- Revenue: Increase in revenue should be credit and decrease should be debit.
a.
To prepare: Journal entry for short-term investment.
b.
To prepare: Journal entry to record principal amount and interest on short-term investment.
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Chapter C Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- Assume that a company is choosing between two alternatives-lease a piece of equipment for five years or buy a piece of equipment and sell it in five years. The costs associated with the two alternatives are summarized as follows: LeaseBuyPurchase cost of equipment $ 60,000Annual operating costs $ 6,000Immediate deposit$ 25,000 Annual lease payments$ 18,000 Salvage value (5 years from now) $ 8,000 If the company chooses the lease option, it will have to pay an immediate deposit of $25,000 to cover any future damages to the equipment. The deposit is refundable at the end of the lease term. The annual lease payments are made at the end of each year. Based on a net present value analysis with a discount rate of 24%, what is the financial advantage (disadvantage) of buying the equipment rather than leasing it? Multiple Choice $(8,687) S(4,877) $(7,857) S(7,367)arrow_forwardSheffield Corp. sells its product for $75 per unit. During 2016, it produced 70,000 units and sold 55000 units (there was no beginning inventory). Costs per unit are: direct materials $16, direct labor $15, and variable overhead $4. Fixed costs are: $910,000 manufacturing overhead, and $93,000 selling and administrative expenses. The per-unit manufacturing cost under absorption costing is__.arrow_forwardNeed help me this question general accountingarrow_forward
- During FY 2016 GM Manufacturing had total manufacturing costs are $470,000. Their cost of goods manufactured for the year was $416,000. The January 1, 2017 balance of Work-in-Process Inventory is $65,000. Use this information to determine the dollar amount of the FY 2016 beginning Work-in-Process Inventory. Ansarrow_forwardWhat is the variable cost per minute?arrow_forwardThe number of units it would need to manufacturearrow_forward
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