1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
posledela
3 years ago
6

Smart Services performed $6,000 of services. Their customer paid $1,000 of the amount right away but charged the remaining amoun

t. To record this transaction, the business would: A. Debit Cash $1,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $6,000 B. Debit Cash $1,000; Credit Fees Income $1,000 C. Debit Accounts Receivable $6,000 and; Credit Fees Income $6,000 E. Debit Cash $1,000 and Debit Accounts Payable $5,000; Credit Fees Income $6,000
Business
1 answer:
Arisa [49]3 years ago
4 0

Answer:

A. Debit Cash $1,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $6,000

Explanation:

When revenue is earned and cash is paid, debit cash and credit revenue. However, when revenue is earned and cash is yet to be paid, debit accounts receivable and credit revenue.

Hence, given that Smart Services performed $6,000 of services. Their customer paid $1,000 of the amount right away but charged the remaining amount.

Entries required are

Debit Cash $1,000

Debit Accounts Receivable $5,000

Credit Fees Income $6,000

You might be interested in
Match the different types of incomes to their sources.
Rzqust [24]
There are three (3) types of income: Earned Income, Portfolio Income and Passive Income. 

Earned Income - a type of income that is generated through work (e.g. salary)

Portfolio Income - These income are somewhat called "capital gains" because it is where the state gets salary taxes. This type of income is generated through selling investments in a higher price that you paid. 

Passive Income - This type of income is generated through your assets that you have created. Like for instance, you bought a house and let it rent to earn an income. 



7 0
2 years ago
Read 2 more answers
Dufner Co. issued 17-year bonds one year ago at a coupon rate of 6.3 percent. The bonds make semiannual payments. if the YMT on
MA_775_DIABLO [31]

Answer:

-_-

Explanation:

-

4 0
3 years ago
Suppose that jack, sophia, and hal enter into a contract to close on the business without the non-competition agreement. jack st
Anarel [89]

If jack does not accept the $100,000 there is a valid contract for the sales business, with out a non competition clause.

4 0
3 years ago
In the chapter, we used Rosengarten Corporation to demonstrate how to calculate EFN. The ROE for Rosengarten is about 7.3 percen
satela [25.4K]

Answer:

Explanation:

Sustainable Growth:

The maximum growth rate a firm can achieve with no external equity financing while maintaining  a constant debt-equity ratio is known as Sustainable Growth Rate. It is the maximum rate of  growth a firm can maintain without increasing its financial leverage.

The formula for finding out the sustainable growth rate is:

sustainable\, grwth\, rate=\frac{ROE \times b}{1-ROE \times b}

Where

ROE — Retum On Equity

b — plowback or retention ratio

ROE is the product of profit margin, total asset turnover and equity multiptier.

External Financing Needed (EFN) is the increase in assets minus the addition to retained

earnings.

EFN = Increase in assets - Addition to retained earnings

The increase in assets is the product of the beginning assets and the growth rate.

Increase in assets = Beginning assets x growth rate

The addition to the retained earnings next year is the product of current net income and the

retention ratio and one plus growth rate.

Addition to retained earnings = Current net income x retention ratio x(1+ growth rate)

The ROE of Rosengarten Corporation is 7.3%, plowback ratio is 67%. Then, the sustainable  growth rate is 5.14% only. The question is whether a growth rate of 25% can be used to calculate  the EFN (External Funds Needed).

The growth rate of 25% can be used to calculate the EFN. The sustainable growth rate formula is

based on two assumptions that the company does not want to sell new equity, and that the  financial policy is fixed. If the company rises outside equity, or increases its debt-equity ratio. it  can grow at a higher rate than the sustainable growth rate.

A firm's ability to sustain growth depends on the following four factors:

1. Profit Margin: An increase in profit margin will increase the firm's ability to generate funds

internally and thereby increase its sustainable growth.

2. Dividend policy: A decrease in the percentage of net income paid out as dividends will

increase the retention ratio. This increase internally generated equity and thus increases

sustainable growth.

3. Financial policy: An increase in the debt-equity ratio increases the firm’s financial leverage.

Since this makes additional debt financing available, it increases the sustainable growth rate.

4. Total asset turnover: An increase in the firm's total asset turnover increases the sales  generated for each dollar in assets. This decreases the firm’s need for new assets as sales grow  and thereby increases the sustainable growth rate. The increasing total asset turnover is the

same as decreasing capital intensity.

The sustainable growth rate illustrates the explicit relationship between the firm's four major  areas; its operating efficiency as measured by profit margin, its asset use efficiency as measured  by total asset turnover, its dividend policy as measured by the retention ratio, and its financial  policy as measured by the debt-equity ratio.

Thus, the company could also grow faster when its profit margin increases, it it changes its dividend policy, by increasing the retention ratio or by increasing its total asset turnover.

7 0
2 years ago
You own factory A and factory B. The next cash flow for each factory is expected in 1 year. Factory A has a cost of capital of 3
ziro4ka [17]

Answer: See Explanation

Explanation:

First, we have to calculate the worth of factory A which will be:

= Cash flow / Cost of capital

= $19300 / 3.5%

= $19300 / 0.035

= $551428.57

= $551429

Cost of capital of Factory B = Cash flow / Worth

= $19,900 / $545,000

= 0.0365

= 3.65%

Cost of capital of Factory A = 3.5%

Cost of capital of Factory B = 3.65%

Worth of factory A = $551429

Worth of Factory B = $545,000

Therefore, factory A is more valuable than Factory B and Factory B is more risky than Factory A.

6 0
2 years ago
Other questions:
  • Hawke Skateboards is considering building a new plant. Bob Skerritt, the company's marketing manager, is an enthusiastic support
    14·1 answer
  • Suzanne's Cleaners is considering a project that has the following cash flow data. What is the project's payback?
    7·1 answer
  • An investment of $10,000 has an investment/inflow ratio of 6.2 and a useful life of12 years. What are the annual cash inflow and i
    5·1 answer
  • Rubina convinced mariah to start a business with her in a partnership rather than a sole proprietorship. the disadvantage of a s
    5·1 answer
  • Question help an employee has gross earnings of​ $2,000 with withholdings of​ 6.2% ficaminus−​oasdi, 1.45​ % ficaminus−​medicare
    12·1 answer
  • Question 4 (multiple choice)
    7·1 answer
  • The objectives of cybersecurity are to accomplish each of the following except:_______ a. Make data and documents available and
    15·1 answer
  • Goods that are considered to be needs tend to be elastic when the price changes. inelastic when the price changes. elastic when
    9·2 answers
  • Mary visits her local shopping mall to purchase some much needed additions to her wardrobe. In selecting the items she wants to
    14·1 answer
  • g Suppose that Real GDP is growing at 7.3% per year, and that the population is growing at 2.3% per year. This implies that Real
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!