All categories

2 years ago

Differentiate between bad debt and doubtful debt

Business

1 answer:

umka2103 [35]2 years ago

3 0

answer and explanation :

A bad debt is a specifically-identified account receivable that will not be paid and so should be written off at once, while a doubtful debt is one that may become a bad debt in the future and which it may be necessary to create an allowance for doubtful accounts.

You might be interested in

Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of cumulative preferred 1% stock, $

Kitty [74]

Answer:

#1 36,000 preferred

#2 58,000 preferred

#3 58,000 preferred // 17,000 common

#4 50,000 preferred // 74,000 common

Explanation:

preferred stock dividends:

40,000 x $125 each x 1% = 50,000

the common stock will take whatever is left after preferred stock.

first year: $ 36,000

asthe preferred stock are cumulative, there is 14,00 dividends in arrears

second year: $ 58,000

we got the 50,00 for the current year plus the 16,000 in arrears

this amount declared is not enough, there are still 8,00 in arrears

third year: $ 75,000

there is 58,000 dividends for preferred stock

the rest goes for common stock

fourth year: $ 124,000

there is no arrears so the preferred only receive the 50,000 and the rest goes for common shares.

3 0

3 years ago

Clarence is purchasing a $142,000 home with a 15-year mortgage. He will

madreJ [45]

Answer:

prime mortgage insurance (PMI) is an insurance that mortgage lenders require when borrowers make a down payment of less than 20% of the purchase price of the house.

We are not given any table, so I looked in the internet to find one that can be used as an example:

outstanding principal = $142,000 - 17% = $117,860

mortgage term equal or less than 15 years
base loan amount is less than $625,000
loan to value ratio = 1 - down payment = 83%, which means it is ≤ 90%
bps = 45

total yearly premium = principal x bps = $117,860 x 0.0045 = $530.47

monthly PMI payment = $530.47 / 12 months = $44.20

6 0

3 years ago

Which of the following terms refers to a promise made to lenders by a borrower?

Natali5045456 [20]

Answer:

Covenant.

Explanation:

A covenant in business context refers to a formal debt agreement between a lender and a company that specific actions will or will not be undertaken.

4 0

3 years ago

On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flo

harina [27]

Answer and Explanation:

The items that should be reported on the cash flow statement is shown below;

On March 12 Purchase of fixed assets - investing activity - deducted - $104,300

On Oct 4 Sale of fixed assets - investing activity - added - $63,840

Gain on sale of fixed assets - operating activities - deducted - $31,710 ($95,550 - $63,840)

6 0

3 years ago

What is one benefit US workers who have a college degree rather than a high school diploma?

Alex777 [14]

Answer:

Those with a college degree earn nearly twice as much as those without college.

Explanation:

A college degree increases the chances of securing a higher paying job than a high school diploma. Most employers insist on college degrees for managerial or executive positions. These are the positions with good pay packages. Currently, college graduates earn nearly twice their high school diploma holders.

7 0

3 years ago

Differentiate between bad debt and doubtful debt​

Differentiate between bad debt and doubtful debt