Answer:
Bad debt expense $11,320 ($283,000 × 4%)
To Allowance for doubtful debts $11,320
(being the bad debt expense is recorded)
Explanation:
The journal entry is shown below:
Bad debt expense $11,320 ($283,000 × 4%)
To Allowance for doubtful debts $11,320
(being the bad debt expense is recorded)
For recording this given transaction, we debited the bad debt expense as it increases the expenses account and at the same time it decreases the account receivable so the allowance would be credited so that the proper posting could be done
Answer:
the material cost per unit is $4.60 per unit
Explanation:
The computation of the material cost per unit is shown below:
= Total material cost ÷ equivalent units of material
= $86,940 ÷ (18,900 - 1,000) × 100% + 1,000 × 100%
= $86,940 ÷ (17,900 + 1,000)
= $86,940 ÷ 18,900
= $4.60 per unit
Hence, the material cost per unit is $4.60 per unit
The same should be considered and relevant
Cost of equity capital is closest to: 16 percent
Solution:
WACC is covered on page 120 Corporate Finance, under Capital Structure.
Using the standard equation for WACC = %wt Equity x cost of equity (re) + %wt Debt x cost of debt (rd).
Since there is a 20% tax rate for the firm, the cost of borrowing is reduced by that amount. So the cost of debt is 4%, not 5%.
Plug the formula: 10% = 50% x re + 50% x 4%
The formula ( i.e. 0.1+(0.1-0.05)(1)(1-0.2)) in CFAI reading is questionable.
The calculation is 0.1+(0.1-0.05*(1-0.2))*(1)=16%
Answer:
Deal
Explanation:
Amount of cash left in the 5 Suitcase = $1 , $30000, $100000, $300000, $750000
The probability of selecting each bad is equal and it is 1/5
Thus, the expected value of prize = 0.2(1+30000+100000+300000+750000)
= 0.2 * 1180001
= $236,000.2
0
Since the bank is offering amount of $250,000 which is greater than the expected value, then it is considered as a deal.
Answer:
$628.49
Explanation:
Cash flows Discount factor Future value
$100 1.1449 $114.49
$200 1.07 $214
$300 1 $300
Future value $628.49
The discount factor is as follows
= (1 + interest rate)^number of years
For $100 the year is 2
For $200 the year is 1
For $300 the year is 0
