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Travka [436]
3 years ago
11

When overapplied / underapplied overhead is prorated, the basis for proration is:?

Business
1 answer:
spin [16.1K]3 years ago
7 0
Proration occurs because it is impossible to accurately estimate the future overhead costs and production activity; it is either the overhead is over applied or under applied. The variance will have to be adjusted for at the end of the financial year.
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The following transactions apply to Jova Company for Year 1, the first year of operation:
aleksandr82 [10.1K]

Answer:

<u>Year 1: </u>

a. Issued $17,000 of common stock for cash.  ⇒ ASSET SOURCE

Dr Cash 17,000

    Cr Common stock 17,000

b. Recognized $63,000 of service revenue earned on account.  ⇒ ASSET SOURCE

Dr Accounts receivable 63,000

    Cr Service revenue 63,000

c. Collected $56,400 from accounts receivable.   ⇒ ASSET EXCHANGE

Dr Cash 56,400

    Cr Accounts receivable 56,400

d. Paid operating expenses of $36,600.   ⇒ ASSET USE

Dr Operating expense 36,600

    Cr Cash 36,600

e. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. ⇒ ASSET USE  

Dr Bad debt expense 132

    Cr Allowance for doubtful accounts 132

<u>Year 2:</u>

a. Recognized $70,500 of service revenue on account.   ⇒ ASSET SOURCE

Dr Accounts receivable 70,500

    Cr Service revenue 70,500

b. Collected $64,400 from accounts receivable.  ⇒ ASSET EXCHANGE

Dr Cash 64,400

    Cr Accounts receivable 64,400

c. Determined that $860 of the accounts receivable were uncollectible and wrote them off.  ⇒ ASSET EXCHANGE

Dr Bad debt expense 860

    Cr Accounts receivable 860

d. Collected $300 of an account that had previously been written off.  ⇒ ASSET EXCHANGE

Dr Accounts receivable 300

    Cr Bad debt expense 300

Dr Cash 300

    Cr Accounts receivable 300

e. Paid $48,100 cash for operating expenses.  ⇒ ASSET USE

Dr Operating expense 48,100

    Cr Cash 48,100

f. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1 percent of sales on account.  ⇒ ASSET USE

Dr Bad debt expense 117

    Cr Allowance for doubtful accounts 117

<u>trial balance year 1</u>

Dr Cash 36,800

Dr Accounts receivable 6,468

Cr Common stock 17,000

Cr Service revenue 63,000

Dr Operating expense 36,600

Dr Bad debt expense 132

Income Statement

<u>Year 1</u>

Service revenue                                       $63,000

Expenses:

  • Operating expense $36,600
  • Bad debt expense $132                 <u>($36,732)</u>

Net income                                                $26,268

Balance Sheet

<u>Year 1</u>

Assets:

Cash $36,800

Accounts receivable $6,468

Total Assets $43,268

Equity:

Cr Common stock 17,000

Retained earnings $26,268

Total equity $43,268

Statement of changes in stockholders' equity

<u>Year 1</u>

Beginning balance                       $0

Common stock issued               $17,000

Net income                              <u>  $26,268</u>

Ending balance                          $43,268

<u>trial balance year 2</u>

Dr Cash 16,600

Dr Accounts receivable 5,123

Cr Service revenue 70,500

Dr Operating expense 48,100

Dr Bad debt expense 677

Income Statement

<u>Year 2</u>

Service revenue                                       $70,500

Expenses:

  • Operating expense $48,100
  • Bad debt expense $677                 <u>($48,777)</u>

Net income                                                $21,723

Statement of changes in stockholders' equity

Beginning balance:

Common stock issued               $17,000

Retained earnings                     $26,268

Net income                               <u>  $21,723</u>

Ending balance                          $64,991

Balance Sheet

<u>Year 2</u>

Assets:

Cash $53,400

Accounts receivable $11,591

Total Assets $64,991

Equity:

Cr Common stock 17,000

Retained earnings $47,991

Total equity $64,991

Statement of cash flows

<u>Year 2</u>

Net income                                           $21,723

Adjustments to net income:

Increase in accounts receivable         <u>($5,123)</u>

Net cash from operating activities     $16,600

Net cash increase                               $16,600

Beginning cash balance                    <u>$36,800</u>

Ending cash balance                         $53,400  

3 0
2 years ago
If there are no excess reserves in the banking system and the Fed lowers the required reserve ratio, it follows that banks will
blagie [28]

Answer:

Excess reserves

Explanation:

Money supply in the economy is regulated by the central bank of Federal Reserve through various methods.

One of them is the use of reserve ratio.

Reserve ratio is the percentage of total deposit in a bank that commercial banks are required to keep aside and not use.

If there is no excess reserves and the Fed lowers required reserve ratio, it means banks will now have more money they can use to service customers.

The excess excess of the reserve can now the used to give out loans

3 0
2 years ago
3. What are three purchasing activities in businesses?
zheka24 [161]
Mark me brainiest


Personal Purchases.
Mercantile Purchasing.
Industrial Purchasing.
Institutionalized or government purchasing.
3 0
3 years ago
What are three goods provided by the federal government?
Rudiy27
Housing insurance and food stamps   I think?
8 0
2 years ago
You have a loan outstanding. It requires making three annual payments at the end of the next three years of $3000 each. Your ban
Oksana_A [137]

Answer:

The final payment would be of amount $9000

Explanation:

The keywords of the question state that the bank needs an equal amount of money by both of the payment procedures. Hence, no matter which payment method I choose on the outstanding loan, the bank would need a sum of 3x3000 = $9000

5 0
3 years ago
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