Dec 1 Borrowed $12,000 from the North Pole Bank for three years, at 4 interest Interest is due on the first day of every month, starting on January 1 next year Dec 5 Hired seven elves to package toys (they start work tomorrow) and nine reindeer to deliver them on Christmas Eve Dec 24 Since they were hired, the seven elves have worked for 15 days each, 7 5 hours per day, and today Santa pays them $18 per hour Dec 24 As the North Pole is in Canada, Santa has deducted the following in total from the elves' pay EIT $2250 CPP $580 and EI $350 The appropriate employer portion is also accrued Dec 26 The deliveries were successful and the reindeer are paid with apples, oats, honey, and whatever milk and cookies Santa was able to take away Dec 28 Santa's accountants, Scrooge, Grinch Partners, tell Santa that he owes $8500 for last year's income taxes He has not paid this amount yet It will be paid in April Dec 31 The first interest amount on the loan, due tomorrow, is accrued Jan 1 The bank deducts the interest from Santa's account Jan 15 Santa pays Revenue Canada the amount owed with respect to the elves' payroll How does Santa record the December 28 transaction (1 mark) a) increase both EIT Payable and Income Tax Expense b) Increase Income Tax Expense and decrease Cash Oc) increase both EIT Payable and EIT Expense d) increase both Income Tax Payable and EIT Expense Oe) increase both Income Tax Payable and Income Tax Expense Question 77 (1 point) How does Santa record the interest accrual on December 31 (1 mark) a) no entry required b) increase both Bank Loan Payable and Interest Expense Oc) increase both Interest Payable and Interest Expense d) increase both Interest Payable and Bank Fee Expense e) increase both Accounts Payable and Interest Expense Of) increase both Accounts Payable and Bank Fee Expense Question 78 (1 point) How does Santa record the interest payment on January 1 (1 mark) a) decrease Interest Payable, Bank Loan Payable, and Cash Ob) decrease both Bank Loan Payable and Cash c) decrease both Accounts Payable and Cash

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 18, 2024

Dec. 1 Borrowed $12,000 from the North Pole Bank for three years, at 4% interest. Interest is due on the first day of every month,

Dec. 1	Borrowed $12,000 from the North Pole Bank for three years, at 4% interest. Interest is due on the first day of every month, starting on January 1 next year.
Dec. 5	Hired seven elves to package toys (they start work tomorrow) and nine reindeer to deliver them on Christmas Eve.
Dec. 24	Since they were hired, the seven elves have worked for 15 days each, 7.5 hours per day, and today Santa pays them $18 per hour.
Dec. 24	As the North Pole is in Canada, Santa has deducted the following in total from the elves' pay: EIT $2250; CPP $580; and EI $350. The appropriate employer portion is also accrued
Dec. 26	The deliveries were successful and the reindeer are paid with apples, oats, honey, and whatever milk and cookies Santa was able to take away.
Dec. 28	Santa's accountants, Scrooge, Grinch & Partners, tell Santa that he owes $8500 for last year's income taxes. He has not paid this amount yet. It will be paid in April.
Dec. 31	The first interest amount on the loan, due tomorrow, is accrued.
Jan. 1	The bank deducts the interest from Santa's account.
Jan. 15	Santa pays Revenue Canada the amount owed with respect to the elves' payroll.

image text in transcribed

How does Santa record the December 28 transaction? (1 mark) a) increase both EIT Payable and Income Tax Expense b) Increase Income Tax Expense and decrease Cash Oc) increase both EIT Payable and EIT Expense d) increase both Income Tax Payable and EIT Expense Oe) increase both Income Tax Payable and Income Tax Expense Question 77 (1 point) How does Santa record the interest accrual on December 31? (1 mark) a) no entry required b) increase both Bank Loan Payable and Interest Expense Oc) increase both Interest Payable and Interest Expense d) increase both Interest Payable and Bank Fee Expense e) increase both Accounts Payable and Interest Expense Of) increase both Accounts Payable and Bank Fee Expense Question 78 (1 point) How does Santa record the interest payment on January 1? (1 mark) a) decrease Interest Payable, Bank Loan Payable, and Cash Ob) decrease both Bank Loan Payable and Cash c) decrease both Accounts Payable and Cash