Answer to Question #244243 in Accounting for samantha

Question

Directions: Answer the following questions with the most correct answer whether the selection is in multiple-choice or supply the answer.

7. Suppose Ms. Ellana has to owe you money for selling goods on May 12, 2021 and she
will be going to pay only on November 2, 2021, prove that your accounts receivable is
current in nature.

8. What is the normal balance of Bonds Payable?

9. Differentiate a service, merchandising, and manufacturing entity by providing 2 examples
for each type of business.

Answer 1

7.

Goods were sold to Ms. Ellana on May 12, 2021 and she will pay the amount on November 2, 2021. This means goods sold to Ms. Ellana on credit and the amount will be paid within a period of less than a year. So, it can say that accounts receivable is current in nature because credit period is less than a year.

8.

The normal balance of Bonds Payable is a debit balance. In case of discount on bonds, it represents the excess of par value over the issued price of the bonds. It generally shows as a discount on Bonds Payable on the balance sheet.

On the other hand, the normal balance of Bonds Payable is a credit balance in case of account premium. In this case, the issue price is greater than par value of the bonds.

9.

Service Entity: A service entity provides a service to both private and commercial clients to fulfill their needs. Accounting, legal, cable television and internet connections are some examples of such services. Deloitte and PricewaterhouseCoopers (PwC) are accounting firms that provides various professional services such as auditing, corporate finance and legal advice to their clients.

Merchandising Entity: Merchandise entity refers to all those firms that engage in selling of goods. Department stores, grocery stores and dealerships are good examples of merchandise business. Walmart and Target are two most common types of merchandise businesses because they sell physical goods or products to its customers.

Manufacturing Entity: Manufacturing entity refers as a firm that produces a product and sells to merchandising entities. For example, Proctor and Gamble (P&G) produces a variety of FMCG and sells to retailers. An automobile firm such as Toyota is also a good example of manufacturing entity. It is because Toyota manufactures cars in their factories and then sells to dealers.