Answer:
1 Plum company has paid USD 7500 for management service to be performed for next two year to be treated as prepaid on the date of payment i.e. July 1
2 Payment made on July 1 for two year means for coming 24 months.
3 Hence USD 7500/24 equals to USD 312.5 which should be charged in Expense account on monthly basis.
4 Period Between July to December is of 6 months
5 Hence the amount to be transferred to expense account would be USD 312.5*6 equivalent to USD 1875
6 Hence E would be correct choice for adjustment entry of prepaid
Answer:
Missing word <em>"Indicate the effect each transaction has on the accounting equation, (Assets = Liabilities + Stockholders' Equity), using plus and minus signs."</em>
Assets = Liabilities + Stockholders' Equity
1. Increase(+) No Effect Increase(+)
2. Decrease(-) No Effect Decrease(+)
3. Increase(+) No Effect Increase(+)
4. Decrease(-) No Effect Decrease(+)
Answer:
A
Explanation:
Average rate of return is a capital budgeting method. It is used to determine if a firm should invest in a project or should not invest in a project
average rate of return = average net income / average cost of investment
average net income = (total net income - depreciation) / useful life
(8,500,000 - $4,250,000) / 20 = 212,500
Average cost of investment =( beginning book value of the investment - ending book value of the investment) / 2
($4,250,000 - 0) / 2 = 2,125,000
ARR = 212,500 / 2125,000 = 0.1 = 10%
It can be C because it's accepting the risk to do it
But it can also be B because it's sharing the risk with everyone else
