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jarptica [38.1K]
3 years ago
12

Haven Company uses the percentage of receivables method for recording bad debt expense. The accounts receivable balance is $600,

000 and credit sales are $2,700,000. Management estimates that 4% of accounts receivable will be uncollectible.
Required:
1. What adjusting entry will Haven Company make to record bad debt expense if the Allowance for Doubtful Accounts has a $5,000 credit balance before adjustment?
Business
1 answer:
Katena32 [7]3 years ago
7 0

Answer:

Debit Bad debt expense   $19,000

Credit Allowance for doubtful debt   $19,000

Explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.  

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debt expense.

Amount that may be uncollectible

= 4% *  $600,000

= $24,000

Given that the Allowance for Doubtful Accounts has a $5,000 credit balance before adjustment, the additional amount to be adjusted for

= $24,000 - $5,000

= $19,000

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Answer:

The multiple choices:

Earnings per share will remain the same since a stock dividend does not create an expense.

Earnings per share will increase because the dividend increases the value of the company.

Earnings per share will decrease because the number of shares outstanding will go up.

The impact cannot be determined without additional information on the new price per share.

The correct option is earnings per share will decrease because the number of shares outstanding will go up.

Explanation:

Initial EPS=earnings attributable to common stock/average weighted number of common stock

earnings attributable to common stock is $25,000,000

average weighted number of common stock is 10,000,000

Initial EPS=$25,000,000/10,000,000

                 =$2.5

EPS with 10% stock dividend :

average weighted number of common stock=10,000,000*(1+10%)

average weighted number of common stock=10,000,000*(1+0.1)

average weighted number of common stock=11,00,000

EPS with 10% stock dividend=$25,000,000/11,000,000

                                                  =$2.27

EPS reduced from $2.5 to $2.27 due to 10% stock dividend as there are more shares than  previously.

8 0
2 years ago
The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15
Helga [31]

Answer:

D. Debit to Dividends Payable.

Explanation:

The first thing we have to keep in mind is that dividends are liabilities, that is, they represent cash outflows for the corporation. In the example, we can distinguish two moments: the declaration of a cash dividend and its effective distribution. Next, we will analyze them from an accounting point of view:

  • On July 15, 2014, Benson Company declared a cash dividend. In accounting terms, on that day the “Retained Earnings” account was debited. Remember that this account is the one that records the profits that the company has obtained to date. So, what was done was to <em>subtract</em> that part that is to be distributed among stockholders. This amount is then transferred to a current liability account called “Dividends Payable”. In this case, money was <em>added</em>, therefore, the account was credited.

  • On August 15 dividends were distributed. That day, the "Dividends Payable" account was debited, or, in other words, its money was <em>discounted</em>, because it is now in the hands of shareholders.
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3 years ago
In the study of geomorphology, why do we primarily concentrate on processes rather than on distribution patterns by latitude?
4vir4ik [10]
In the study of geomorphology, processes like weathering and erosion are key to how the rocks will be sculpted by natural forces to produce interesting landforms like buttes and mesas for example. The distribution of geomorphological features like say the Amazon River by latitude is important but the process that shaped the landforms is more important as to how it got its present configuration.
5 0
3 years ago
Iota Inc. has a freewheeling culture, whereas Axiom Inc. has a culture based on structure and discipline. The merger of these tw
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Cultural gap

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The merger of Iota Inc. and Axiom Inc. will be difficult due to the presence of a culture gap. An organization's culture may not always be in alignment with the needs of the external environment. The values and ways of doing things may reflect what worked in the past. The difference between desired and actual values and behaviors is called the culture gap. Culture gaps can be immense, particularly in the case of mergers.

Hope this works!!!!!

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The market fee is the modern rate at which an excellent service can be purchased or sold. The market price charge of an asset or carrier is decided with the aid of the forces of delivering and calling for; the fee at which the amount provided equals the amount demanded is the marketplace rate.

The primary price is the amount receivable through the manufacturer from the customer for a unit of an amazing or provider produced as output minus any tax payable, and plus any subsidy receivable, by means of the producer as a result of its manufacturing or sale.

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