Answer:
a. Groupo sells goods to MTN for $1,000,000, payment due at delivery.
- transaction price = $1,000,000
- revenue recognized once the goods are delivered
No journal entry is required until goods are delivered and accepted.
b. Groupo sells goods on account to Grifols for $800,000, payment due in 30 days.
- transaction price = $800,000
- revenue recognized immediately since goods were already delivered
The journal entry:
Dr Accounts receivable 800,000
Cr Sales revenue 800,000
c. Groupo sells goods to Magnus for $500,000, payment due in two installments, the first installment payable in 18 months and the second payment due 6 months later. The present value of the future payments is $464,000.
- transaction price = $480,000
- revenue recognized immediately since goods were already delivered
The journal entry:
Dr Notes receivable 500,000
Cr Sales revenue 480,000
Cr Discount on notes receivable 20,000
Answer:
$100, $700, $800
Explanation:
Calley Journal entries would include:
Debiting $100 to the cash account
Debit the $700 to the receivables account
Credit $800 to the revenue account
This follows the double entry rule that a credit in one account must correspond to at least one debit in another account.
We debit all asset accounts(receivables,cash) when increased and credit all liabilities account when increased. We credit all income account(revenue) when increased and debit all expenses account when increased.
The huge industrial trusts developed in industries such as steel and oil because there was a lot of competition to make the most profit and to be the best factory. Oil was a huge cooperation because it fueled the trains. Smaller bothersome rival companies would join bigger ones to create a monopoly. Standard oil owned by Rockefeller was a vast power and the word trust came to be generally used to describe any large scale business combination. Steel became a large industry for the fact that it was a strong metal that built the trains and tall sky scrappers. Also steel was used to build the transcontinental rail roads The Bessemer process came about which was a method of making cheap steel. It made the economy a more cut throat environment of dog eat dog and became ruthless. The economy was about power and money and was very greedy. Immigrant workers were employed with very low wages and worked laboriously many hours a day. Their effect on the economy was to create large <span>monopolies, their effects were tremendous.</span>
Answer:
c. The present value of the perpetuity has to be higher than the present value of either the ordinary annuity or the annuity due
Explanation:
Considering the following statements:
- the ordinary perpetuity, the payments must occur on the first day of each monthly period. Hence this statement is incorrect.
- The ordinary annuity would be more valuable than the annuity due if both had a life of 10 years. Incorrect.
- In case of perpetuity the times is not limited, hence would get the higher return.
