Answer:
Given that,
Total prepaid insurance = $6,700
Monthly insurance:
= Total prepaid insurance ÷ 4 months
= $6,700 ÷ 4 months
= $1,675
Insurance expense for two months:
= $6,700 - $1,675
= $5,025
Therefore, the adjusting entry required on December 31 is as follows:
Insurance expense A/c Dr. $5,025
To Prepaid insurance $5,025
(To record the adjusting entry for the insurance)
Answer:
The gain on retirement = $4,600
Explanation:
The gain or loss on retirement = Carrying Value of the Bonds - Call price of the Bonds
The gain or loss on retirement = $111,100 - $106,500
The gain on retirement = $4,600
Note: Par value will not be taken for the calculation of the above
Answer:
the bad debt expense is $900
Explanation:
The computation of the bad debt expense is shown below:
bad debt expense is
= Written off amount + estimated uncollectible amount at the year end
= $650 + $250
= $900
We simply added the above two items so that the amount of the bad debts for the first year could come
Hence, the bad debt expense is $900
Answer:
c. 2.30 years
Explanation:
In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:
In year 0 = $1,150 (Initial investment)
In year 1 = $500
In year 2 = $500
In year 3 = $500
If we sum the first 2 year cash inflows than it would be $1,000
Now we deduct the $1,000 from the $1,150 , so the amount would be $150 as if we added the fourth year cash inflow so the total amount exceed to the initial investment. So, we deduct it
And, the next year cash inflow is $500
So, the payback period equal to
= 2 years + ($150 ÷ $500)
= 2.30 years
In 2.30 yeas, the invested amount is recovered.
