Answer:
A week later, you browse through the trend reports.
Answer:
The future value of these cash flows at the end of year 4 is $71,885.80
Explanation:
In order to calculate the future value of these cash flows at the end of year 4 we would have to use the following formula:
n
∑
FV = i=1 [CFi * (1 + r)(n - i)]
FV = [$11,800 * (1 + 0.10)∧(4-1)] + [$14,000 * (1 + 0.10)∧(4-2)] + [$18,200 * (1 + 0.10)(4-3)] + [$19,000 * (1 + 0.10)(4-4)]
FV = $15,705.80 + $16,940 + $20,020 + $19,000
FV=$71,665.80
The future value of these cash flows at the end of year 4 is $71,885.80
Answer: a. $22,000
b. $16,000
Explanation:
The amount to be added to Allowance for Doubtful Accounts in each of the following cases are:
a. Balance of $3,000 in the allowance account just prior to adjustment. Analysis of accounts receivable indicates doubtful accounts of $25,000.
The amount to be added to the allowance for doubtful accounts will be doubtful accounts of $25,000 minus the balance of $3,000 in the allowance account just prior to adjustment. This will be:
= $25,000 - $3000
= $22000
b. Balance of $500 in the allowance account just prior to adjustment. Uncollectibles are estimated at 2% of sales, which totaled $800,000 for the year.
The amount to be added to the allowance for doubtful accounts will be:
= 2% of $800,000
= 2/100 × $800,000
= 0.02 × $800,000
= $16,000
Answer:
e. Company Heidee has a higher ROE than Company Leaudy.
Explanation:
Return on equity measures how well the management of a business uses owner's equity to get returns. It is calculated by dividing net income by owner's equity.
That is
ROE= Net Income ÷ Owner's equity
Considering the accounting equation
Asset= Liability + Owner equity
Owner equity= Asset - Liability
From the equation when a company that take on more debt owner's equity will reduce.
The effect of reduction in owner's equity on Return on Equity is that it will increase the ratio, since owner's equity is the denominator.
In this scenario both companies have the same profit margin so if company Heidee has higher debt ratio it follows that it also has a higher ROE than Company Leaudy
