X company bought securities that cost 5,000 on April 1, 2018. The securities bear 8% annual...
X company bought securities that cost 5,000 on April 1, 2018. The securities bear 8% annual interest.
What is the closing transaction that X company need to move and what are the effects on the accounting equation?
Choices: (1 correct)
Increase assets and liabilities by 300.
Increase assets and equity by 300.
Increase assets and liabilities by 400.
Increase assets and equity by 400.
Homework Answers
Interest that is receivable on the above security is for 9 months from 1st April 2018 to 31st December 2018 = (5000*8%*(9/12)) = $ 300
Accounting equation , Assets = Liabilities + Equity
Interest receivable being asset under group current assets will be increased by $ 300/.
and
Interest income under equity will increase by $ 300/.
So answer is Increase assets and equity by $ 300/.
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