When one keeps paying only the minimum amount, they will find getting out of debt harder because:
- More interest will accrue on the balance left
When a person pays the minimum balance that they are supposed to pay on a loan, they will be leaving a larger portion of money to be paid back.
This amount will accumulate interest such that the debt will keep increasing because the interest needs to be paid back as well.
In order to get out of debt faster, it is recommended that you pay higher than the minimum because this would reduce the amount that interest is charged on which means that you would owe less interest.
In conclusion, paying the minimum balance leads to more interest accumulating which makes getting out of debt difficult.
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Answer:
The journal entry is as follows:
Explanation:
January 5 Patent A/c..................Dr $100,000
To Cash A/c............Cr $100,000
As patent is purchased so asset is increasing and any increase in asset would be debited. Therefore, patent account is debited. And it is purchased against cash and decrease in asset is credited. Therefore, cash account is credited.
December 31 Amortization expense- Patent................Dr $5,000
To Accumulated Amortization- Patent........Cr $5,000
Working Note:
Patent Cost is $100,000
Useful life is 20 years
Amortization expense = Patent Cost / Useful life of asset
= $100,000 / 20
= $5,000
The answer for this statement would be TRUE. Innovation nowadays have been improving especially in the sports industry because the world wants to keep up with the latest advancements now in the field. Therefore, we could really see that it is more advanced than those used in other service industries.
Answer:
The gross profit method of inventory valuation is not valid when
c. the gross margin percentage changes significantly during the year.
Explanation:
Gross Profit Method:
It is such method that is used to determine the value of ending inventory in a specific period.
- The option a, b and d are valid as this method is used when there is substantial increase in the quantity of inventory or in the cost of the inventory during the year. Moreover, it is also used to calculate the amount of ending inventory that is effected by a disaster such as fire, theft etc.
- The option c is not valid because it is not used when the gross margin percentage changes significantly during the year as gross profit method is only used to determine the amount of an ending inventory.
Answer:
1. A debit to cash for $135,000
Explanation:
The complete entries are
1. A debit to cash for $135,000
2. A credit to common stock account for $135,000
