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ankoles [38]
2 years ago
9

1. Arness Woodcrafters sells $300,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a

finance charge of 6% and retains an amount equal to 3% of accounts receivable. Arness estimates the fair value of the recourse obligation to be $8,000. Prepare the journal entry for (a) Arness and (b) Commercial Factors
Business
1 answer:
stellarik [79]2 years ago
6 0

Answer:

(a)

Dr. Cash                                               $273,000

Dr. Receivable (Commercial Factor)  $9,000

Dr. Loss on sale of Receivables        $20,500

Cr. Account Receivables                    $300,000

Cr. Recourse Payable                         $8,000

(b)

Dr. Account Receivables                                $300,000

Dr. Recourse Receivable ($300,000 x 6%)  $18,000

Cr. Income from Recourse Services               $36,000

Cr. Cash                                                          $273,000

Cr. Account payable (Arness)                        $9,000

Explanation:

The fair value of recourse liability will be recorded by Arness, but the Commercial Factors Inc. will record the actual amount of 6% as receivable.

Cash is received excluding the finance charges and retained accounts receivables.

Net of Liabilities and receivable will be recorded as Loss on the recourse of receivables.

Cash $300,000 – ($300,000 X (.06 + .03)) = $273,000

Due from Factor ($300,000 X .03) = $9,000

Loss on Sale of Receivables = $20,500

Accounts Receivable = $300,000

Recourse Liability = $8,000

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Suppose that the presidents of two auto manufacturing companies exchange text messages in which they discuss jointly raising pri
Svetradugi [14.3K]

Answer:

Sherman Antitrust Act of 1890

Explanation:

Based on the information provided within the question it can be said that this communication is violating the Sherman Antitrust Act of 1890. This Act was passed prohibiting any contract, trust, or conspiracy in restraint of interstate or foreign trade in order to prevent oppressive business practices and monopolies. This is what the two companies are doing by agreeing to jointly raise the price they are able to control the entire markets price thus creating a monopoly in the automotive industry, which forces consumers to pay a lot more than what the vehicles are actually worth.

5 0
3 years ago
Melanie is on a team of professionals working on an outdoor ad campaign. Her team has to make sure that the ad has maximum impac
Mrac [35]

Melanie's team should create an ad with an attractive image and minimal text.

Option B

<u>Explanation:</u>

Creating an advertisement with relevant and attractive image along with minimal texts like taglines would publicize the brand and would deliver the relevant message or information among the mass audience with ease and efficiency.

The color and contrast are also one of the important element in editing the image that has been selected for an advertising poster as this would readily  catch the eyes of the target audience.

Writing a pretty long text would not help as a passerby would never wait and read all the texts. Creating a poster with an attractive image and no text would not give the idea about what the ad is.

Therefore, advertising in outdoor would be created with a catchy image and slogan or tagline.

6 0
3 years ago
Read 2 more answers
If the equilibrium price of avocados is $4 and the government issues a price ceiling of $4.50, what is likely to happen in the m
Marat540 [252]

Answer:

A surplus of avocados will result from the price ceiling.

Explanation:

A price ceiling is when the government or an agency of the government sets the maximum price for a good or service.

A price ceiling is binding when it is set below equilibrium price.

The price ceiling ($4.50) is less than the equilibrium price ($4) of avocados. As a result, surplus would increase. The supply of avocados would exceed the demand because price ceiling is above equilibrium price

6 0
3 years ago
All of the following questions are open-ended problems. You must compute an answer for every problem. For percentage answers, ca
DerKrebs [107]

Solution :

13. Net income = total assets x ROA

                   = $ 1,000,000 x 12%

                  = $ 120,000

Net Income for company is $120,000.

Net Profit margin = 4.25%

Total sales = net income / net profit margin

                  = $ 120,000 / 4.25%

                  = $ 2,823,529

Total sales for company is $ 2,823,529

14. Debt ratio = 72%

   So weight of debt = 72%

   Weight of equity = 1 - 72%

                                = 28%

   Debt equity ratio  $=\frac{72 \%}{28 \%}$  

                                 =  2.57

   Debt equity ratio is 2.57

15. Debt ratio = 42.50%

So, weight of debt = 42.50%

Weight of equity = 1 - 42.50%

                             = 57.50%

Weight of equity is 57.50%.

Return on equity = 15%.

Return on assets = 57.50% × 15%

                            = 8.625%

Return on assets is 8.625%.

16.

Debt Equity ratio = 1.45

Weight of debt = 59.18%

Weight of equity = 40.82%

Return on assets = 16%

Return on equity = 16% / 40.82%

                              = 39.20%

Return on equity is 39.20%.

17.

Total Assets turnover = Sales / Total Assets

                                     = (Net Income / Total Assets) / (Net Income / Sales)

                                    = ROA / Net Profit margin

                                      = 7.50% / 15%

                                      = 0.50

Total Assets turnover is 0.50.

8 0
3 years ago
The Federal Reserve System and the New York Stock Exchange regulations currently require the short seller to have an initial mar
lutik1710 [3]

Answer:

Correct answer is 50%

Explanation:

The appropriate response is half.  

The Regulation T of the Federal Reserve Board requires the equalization for all short deal records to be at any rate 150% of the estimation of the protections at the time the deal is started.  

This implies when the short deal is started, as we are selling the offers first, our record will have the 100% estimation of the offers sold (as we receipts of cash from selling) in addition to an extra edge prerequisite of half of the estimation of the short deal.  

For instance, on the off chance that I am short selling an offer whose cost is $100, at that point when I short sell the offer, my record equalization will become $100, as receipts of the deal.  

Along these lines, at the hour of inception of offer, my record equalization ought to be 150% of the estimation of short deal = 150% of $100 = $150. The separation of this sum is  

100% of $100 = $100, which gets credited to my record  

in addition half of $100 = $50, which is the edge necessity at the inception of short deal.  

In this way, Initial edge necessity is atleast half of the cost of the stock.  

The student ought not befuddle the underlying edge necessity with the base upkeep edge.  

The base support edge required to be kept up is 25%. This implies the short dealer ought to consistently have an edge (not balance) of 25% in the record. In the event that the edge goes beneath 25%, at that point the edge require the distinction sum is actuated, which the short dealer is required to pay to keep on keeping her situation in the market unaltered.  

Be that as it may, beginning edge required to be kept up is half.

8 0
3 years ago
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