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Serhud [2]
3 years ago
8

On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimat

e bad debt included the following: Accounts Receivable, debit balance of $98,700; Allowance for Doubtful Accounts, credit balance of $1,111. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?
Business
1 answer:
Ymorist [56]3 years ago
3 0

Answer: $4,811

Explanation:

Assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible that would be,

= 6% * 98,700

= $5,922

The Allowance for Doubtful Accounts acts as a buffer for the business when bad debts are incurred.

Bad debts are taken from the Allowance as the Allowance has already been removed from the Receivables.

In cases where Bad debts exceed the buffer in the Allowance for Doubtful Debt Account we take everything in it and the remaining bad debt amount is debited to Bad Debt expense.

That would be,

= 5,922 - 1,111

= $4,811

$4,811 is the amount that should be debited to Bad Debts Expense.

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Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as a.period costs
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Answer:

Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as Product costs and expenses when the goods are sold, Option D.

Explanation:

Indirect costs are also manufacturing overheads which cannot be directly put on the product but they have to be allocated in some way. So, these are treated as 'product costs' and 'expenses' when the goods are sold. They are not period costs as per Option A and option C. Option B which says that it is product costs when incurred, which is also incorrect.

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Direct costs includes the costs of direct 'labor', materials and commissions.

8 0
3 years ago
What is the expected value when a $1 lottery ticket is bought in which the purchaser wins exactly $10 million if the ticket cont
Nadusha1986 [10]

We expect to lose $0.37 per lottery ticket

<u>Explanation:</u>

six winning numbers from = { 1, 2, 3, ....., 50}

So, the probability of winning:

P(win) = \frac{ no of favorable outcomes}{no of possible outcomes}

P(win) = \frac{1}{^5^0C_6} \\\\P (win) = \frac{6! X (50 - 6)!}{50!} \\\\P(win) = \frac{6! X 44!}{50!} \\\\P(win) = \frac{1}{15,890,700}

The probability of losing would be:

P(loss) = 1 - P(win)

P(loss) = 1 - \frac{1}{15,890,700} \\\\P(loss) = \frac{15,890,699}{15,890,700}

According to the question,

When we win, then we gain $10 million and lose the cost of the lottery ticket.

So,

$10,000,000 - 1 = $9,999,999

When we lose, then we lose the cost of the lottery ticket = $1

The expected value is the sum of the product of each possibility x with its probability P(x):

E(x) = ∑ xP(x)

= 9,999,999 X \frac{1}{15,890,700}  + ( -1 ) X \frac{15,890,699}{15,890,700} \\\\=- \frac{5,890,700}{15,890,700} \\\\= - \frac{58,907}{158,907} \\\\= - 0.37

Thus, we expect to lose $0.37 per lottery ticket

7 0
3 years ago
Suppose your firm has a marginal revenue given by the equation MR = 10 - Q where Q is the quantity produced and sold. This means
KonstantinChe [14]

Answer:

The answer is: A) When the marginal cost of producing an additional unit equals the marginal revenue from that unit.

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In economics, we assume that a company´s main goal is to maximize its profit. In order for any company do to this, the marginal cost (MC) of producing an extra unit of production must equal the marginal revenue (MR) obtained by selling that extra unit of production.

Theoretically, in perfect market conditions, MR=MC in the equilibrium point between quantity supplied and quantity demanded. But on real world conditions elasticity of both demand and supply alter the curves.  

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