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iogann1982 [59]
3 years ago
7

Journalize the following transactions for the buyer, Morgan Company, using the net method to account for purchase discounts. Ass

ume a perpetual inventory system. January 3 Purchased goods from Grieg Company on account, $15,000, terms 5/10, n/30. January 9 Returned defective merchandise to Grieg Company that was previously purchased on account, $2,100. January 13 Paid the amount due to Grieg Company.
Business
1 answer:
Vikentia [17]3 years ago
5 0

Answer:

Morgan Company

Journal Entries:

January 3:

Debit Inventory $15,000

Credit Purchase Discount $750

Credit Accounts Payable (Grieg Company) $14,250

To record the purchase of goods on account, terms 5/10, n/30.

January 9:

Debit Accounts Payable (Grieg Company) $1,995

Debit Purchase Discount (Lost) $105

Credit Inventory $2,100

To record the return of defective merchandise.

January 13:

Debit Accounts Payable (Grieg Company) $12,255

Credit Cash Account $12,255

To record the payment of amount due.

Explanation:

Using the perpetual inventory system, the purchase and return of merchandise are recorded in the Inventory account and not in the Purchases account (periodic inventory system).  The cost of goods sold is also credited to the Inventory account.  The perpetual inventory system operates on the use of technology which is able to record inventory transactions as they occur, instead of waiting till the end of a period.  This means that perpetual inventory is being taken every time a transaction occurs.

Using the net method to account for purchased cash discount, it is assumed that the retailer always takes advantage of the discounted cash price and records the purchased inventory at the discounted price. The net method is a way to record purchases of inventory with a cash discount.

Under the net method, the company will credit Accounts Payable for the invoice amount minus any early payment discount that is offered.  Under the gross method, purchases are recorded at the full invoice price without deduction of any cash discounts.

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Answer:

a. Benefits of growth;

1. Increased production to meet demand

b. Negative effects of inflation;

1. Increased opportunity cost of holding money

Explanation:

a.

Expansionary monetary policies are government incentives that aim to encourage the growth of the economy by increasing the supply of money in the economy. It involves the boosting of aggregate demand to cover for the shortfalls in private demand. Most economies that go into a recession is usually due to a lack in the aggregate demand. The main purpose of expansionary monetary policy is to encourage spending and investment by encouraging accessibility of money in the economy. When more people have access to money, they tend to invest more into the economy which encourages economic growth. On the same note, when individuals in an economy have money, it increases the availability of disposable income. This means that most people feel much wealthier which encourages them to spend more. Spending also increases demand for goods which encourages production which consequently encourages economic growth.

b.

On the contrary, when expansionary monetary policy exceeds a certain level, it leads to inflation. Inflation is basically the increase in prices in an economy due to increased demand for goods that surpasses the supply. Thus suppliers increase the price since the availability of goods and services is limited. Some effects of inflation include an increased opportunity cost of holding money and discourages investors since they are uncertain over the future.

6 0
2 years ago
The aftertax cost of debt:
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Answer:

The full options for this answer are:

A. varies inversely to changes in market interest rates.

B. will generally exceed the cost of equity if the relevant tax rate is zero.

C. will generally equal the cost of preferred if the tax rate is zero.

D. is unaffected by changes in the market rate of interest.

E. has a greater effect on a firm's cost of capital when the debt-equity ratio increases.

The correct answer is E. has a greater effect on a firm's cost of capital when the debt-equity ratio increases.

Explanation:

The cost of debt refers to the effective rate that a company pays for its current debt. In most cases, this phrase refers to the after-tax cost of debt, but it also refers to the cost of a company's debt before taxes are taken into account. The difference in the cost of debt before and after taxes lies in the fact that interest expenses are deductible.

The cost of debt is a part of a company's capital structure, which also includes the cost of capital. A company can use various bonds, loans and other forms of debt, so this measure is useful to give an idea of the overall rate the company pays for its debt. The measure can also give investors an idea of the company's risk compared to others, because riskier companies generally have a higher cost of debt.

7 0
3 years ago
table 1 shows the demand schedule for electricity from a coal burning utility table 2 shows teh utiliyy cost of producing electr
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The quantity of electricity generated is <u>300</u> kilowatts a day and the price of electricity is<u> 12 </u>cents a kilowatt.

The pollution tax is <u>6 </u>cents a kilowatt.

The tax revenue is ​$<u> 18</u> a day.

Coal-fired power plants generate electricity by burning coal in a boiler to produce steam. The generated steam flows into the turbine under enormous pressure, driving the generator to generate electricity. The steam is then cooled, condensed and returned to the water, then returned to the boiler, and the process restarted from the beginning.

In the United States, coal is mainly used as a fuel for power generation. Coal-fired power plants burn solid coal, solid coal, and lignite. The heat from burning coal is used to turn water into high-pressure steam, which turns a turbine to generate electricity.

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Explanation:

The Finishing Department

First-in, First-out (FIFO) Process Costing

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Units Received  15000         100         100                       15000      15000

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<u>Less Beg. Inv     5000             100         30                        5000        600</u>

<u>Total units         12000                                                     11000           15000</u>

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