I have an accounting problem?
Question:
a.The company was started when it issued common stock for $8,000 cash.
b.The company purchased land on January 1 that cost $5,800.
c.Northwestern purchased $300 of supplies on account.
d.Northwestern earned $6,200 of revenue on account.
e.Cash collections of receivables were $5,500.
f.On October 1, 2009, Northwestern paid $1,200 in advance for a one-year insurance policy.
Adjusting entry information:
g.Supplies on hand as of December 31, 2009, amounted to $100.
h.Recognized insurance expense.
7.Assuming the land had a market value of $6,000 on December 31, 2009, the land account would be shown
a.as $200 on the income statement.
b.as $5,800 on the balance sheet. (Prob. 1-30A)
c.as $6,000 on the statement of cash flows.
d.none of the above.
Answer:
b.
Land is an asset which does not depreciate. Therefore, on the balance sheet it will be shown as its cost or purchace price.
It wont be a or c as it has not been sold.
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