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Snowcat [4.5K]
3 years ago
7

In 2018, internal auditors discovered that Fay, Inc., had debited an expense account for the $700,000 cost of a machine purchase

d on January 1, 2015. The machine's useful life was expected to be five years with no residual value. Straight-line depreciation is used by Fay. The journal entry to correct the error will include a credit to accumulated depreciation of ___________?
Business
1 answer:
8_murik_8 [283]3 years ago
6 0

Answer:

Explanation:

The correct journal entry is shown below:

Equipment A/c Dr 700,000

      To Accumulated depreciation A/c $420,000

      To Retained earnings A/c $280,000

(Being the error is recorded and the remaining balance is credited to the retained earning account)

The depreciation expense would be

= (Original cost - residual value) ÷ (useful life)  

= ($700,000 - $0) ÷ (5 years)  

= ($700,000) ÷ (5 years)  

= $140,000  

For three years, the depreciation would be

= $140,000 × 3 years

= $420,000

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Answer:

B) Social networking sites

Explanation:

5 0
2 years ago
X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows:Year Project A
liq [111]

Answer:

A) Project A = 0.83 year

B) NPV of Project B = $14,609.66

C) Answer B

Explanation:

Requirement A

We know,

Payback period = Last year with negative cumulative cash flows + (Absolute value of last year's cumulative cash flow ÷ Cash flow of the following year's negative cumulative cash flow)

Or, Payback period = A + ( B ÷ C)

                             Project A                                       Project B

Year   Cash Flow   Cumulative Cash Flow    Cash Flow  Cumulative Cash Flow

0 (A)   -$10,000      -$10,000 (B)                     -$10,000        -$10,000 (B)

1           $12,000 (C)      2,000                           $10,000(C)                 0

2              8,000         10,000                               6,000             6,000

3              6,000         16,000                              16,000           22,000

Payback period for project A = 0 + ($10,000 ÷ 12,000) = 0 + 0.833 = 0.83 year

Payback period for project B = 0 + ($10,000 ÷ 10,000) = 0 + 1 = 1 year

X-treme Vitamin Company should choose project A because it can return the investment earlier than project B.

Requirement B

We can use excel to find the Net Present Value for both the projects with a cost of capital of 10%.

The following image shows the NPV for project A and B.

From the calculation of NPV, X-treme Vitamin Company should choose project B as that project yields more present cash flows.

Requirement C

A firm should generally have more confidence in answer b because money can produce more logical sense than a year. Yes, it is easy to understand how many years a company will need to get back its cash flow. Still, the present value of cash flows provides a more specific evaluation of how to utilize the initial investment.

8 0
3 years ago
Performance is evaluated for an investment center through the comparison of actual and budgeted return on investment (ROI) based
igor_vitrenko [27]

Answer:

True

Explanation:

<em>Return on Investment (ROI) is the proportion of operating assets that an investment center earned as as net operating income.  </em>

<em>ROI is measure of the returned earned by a division relative to the amount invested in the assets used to generate the return. </em>

It is calculated as follows  

ROI = operating income/operating assets  × 100

To evaluate a division, the division's ROI is compared to the budgeted ROI of the company. An actual ROI that exceeds the budgeted is considered a good performance and vice versa

3 0
3 years ago
A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of La
Oxana [17]

Answer:

The correct answer is D

Explanation:

SBU stands for Strategic business unit , it is a profit center whose focus is on the product offering and the market segment. It is usually have a marketing plan which is discrete, marketing campaign and analysis of competition, though it is a part of larger business entity.

So, the private university facing financial problems, they decided to become a profit center. Therefore, this scheme is parallel to SBU which is Strategic business unit.

6 0
3 years ago
Is rental income<br> A. Cash<br> B. Investment
maks197457 [2]

Answer:

Investment, you buy a property to rent in hope to make your money back over time.

Explanation:

3 0
2 years ago
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