Accounting clarifications
##Why is the answer D? I was between A and D…
For Fords, how should they treat the expected costs of brake recalls in the current accounting period?
a)Record the expected loss of sales revenue for new cars.
b)Reduce cash for the estimated costs to repair the cars affected by the recall.
c)Do not need to give financial recognition to the recall.
d)Establish a liability for estimated costs to repair cars affected by the recall.***
###Is the following the current AND adjusted journal entries correct?
b. On December 1, 2013 signed a note with a bank and borrowed $30,000. The annual interest rate is 10% and both principal and interest are payable at maturity on December 31, 2013.
12/1/2013
Cash 30,000
Notes payable 30,000
12/31/2013
Interest expense (E) 250
Interest payable 250
($30,000 x 10% x 1/24 months)