Answer:
As such, the effect on the elements of the financial statements are
Cash increases by $1,045 and receivable decreases by $1100 resulting in a net decrease in assets by $55.
Expense in the statement of other income increase by $55, thereby resulting in a decrease in owner's equity by the same amount.
Explanation:
This type of transaction is called factoring of receivables. When receivable are factored, the company sells the receivable to another and incurs a charge.
This is usually done to ease liquidity pressures.
The entries required on factoring
Debit Cash
Debit Factoring/interest expense
Credit Account receivable
The Factoring charge
= 5% * $1,100
= $55
Amount of cash received
= $1,100 - $55
= $1,045 (posted to cash)
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Answer:
Business cycle
Explanation:
The business cycle also refers to as the rise and fall of economic activity through periods of expansion and recession.
The free cash flow $180,000. 200,000+ 150,000-(90,000+50,000+20,000) =
350,000-170,000= 180,000
<u>Solution and Explanation:</u>
The following table has been made in order to find out the total variance cost that has been incurred and the total cost
<u>Particulars</u> <u>Cost formula based</u> <u>Flexible budget </u> <u>Actual</u> <u>Variance</u>
<u> on 50000 units</u> <u>on the basis of </u>
<u>60000 unit</u>
Direct materials $2 120000 $110000 10000 F
The direct labour $1 60000 60000 0
Variable overhead $1.5 90000 100000 10000 U
Fixed overhead $100000 100000 97000 3000 F
The total cost 370000 367000 3000 F
Where F stands for – favourable and U stands for unfavourable
The total variance cost after the above calculations is = $3000 F