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Fudgin [204]
3 years ago
9

Sage Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis. In

2017, Sage decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $387,800 instead of $299,000. In 2017, bad debt expense will be $122,400 instead of $91,130. If Sage’s tax rate is 27%, what amount should it report as the cumulative effect of changing the estimated bad debt rate?
Business
1 answer:
nikitadnepr [17]3 years ago
3 0

Answer:

The cumulative effect of the change in the rate of bad debt will, therefore, be $0.

Explanation:

According to International Accounting Standard 8( IAS 8), any changes in accounting policies (convention, base, principle, etcetera) and period errors are accounted for retrospectively. This means that previous period figures will have to be adjusted.

On the other hand, any changes in estimates are recognized prospectively. This includes reassessment of future benefits and obligations.

From the given information, the change in the rate of bad debt amounts to a change in estimate. As such, the change in this rate will affect the period in which the change took place. That is, 2017 and in future.

The cumulative effect of the change in the rate of bad debt will, therefore, be $0.

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A company is currently selling 10,000 units of product monthly for $40 per unit. The unit contribution margin is $27. The compan
CaHeK987 [17]

Answer:

The company should accept the idea reason been that the profit will increase by $24,000

Explanation:

Calculation to determine What should the company do

First step

Increased CM = [10,750 x (27+(40-45))]- (10,000 x 27)

Increased CM = [10,750 x(27+5)]- (10,000 x 27)

Increased CM = (10,750 x 32) - (10,000 x 27)

Increased CM = $344,000-$270,000

Increased CM = $74,000

Now let calculate the profit

Profit =$74,000-$50,000

Profit=$24,000 Increase

Therefore based on the above calculation The company should accept the idea reason been that the profit will increase by the amount of $24,000

8 0
3 years ago
The formula for calculating the double-declining-balance method is
ohaa [14]

Answer:

d. book value at beginning of year x 2/estimated service life

Explanation:

Duble Declining method of depreciation is a method in which the depreciation is being charged at double rate than in the straight line depreciation method method do. It uses the double amount of carrying book value and estimated useful life. The depreciation charged at a faster rate.

Formula:

Depreciation = Book value of asset at the start of year x 2 / useful life

8 0
4 years ago
Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it d
Murljashka [212]

Answer:

Related diversification

Explanation:

Related diversification

As the name indicate related diversification is related to expansion of  business in the  same  field to which it is currently working. This can be explained by one example. If any corporation are in a business of making computer parts and the very same corporation expand their business by  making related articles like calculator, smart watch etc. These all are come in the related diversification.

4 0
3 years ago
darby writes a check to education loan management inc, that is drawn on darbys account at federal bank. if thr bank does not acc
Aleksandr-060686 [28]
<span>Liability is on Darby because they were the one to write the original check and give it to the education loan management inc. Since the check wasn't accepted they have to take responsibility and liability for the fact that it was not accepted.</span>
5 0
3 years ago
Suppose social security contributions rise by​ $1 billion while social security benefits also rise by​ $1 billion.​ Further, per
Nadya [2.5K]

Answer:

The answer will be A

Explanation:

As the social security contributions and benefits remain the same in proportion, personal and national income will remain the same.

As disposable income is defined as personal income-personal taxes, and the personal income taxes fall by 500 million (included in the contibutions), this would mean that the disposable income increases.

8 0
4 years ago
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