Recording revenue before it is collected is an example of: Multiple Choice A prepaid expense transaction. A deferred revenue tra
nsaction. An accrued liability transaction.
1 answer:
Answer:
An Accrued Receivable transaction
Explanation:
Before the receipt of cash recording a revenue is the example of accrued receivable because product is sold or services are already been performed on which basis transaction is occurred and recorded. So, the receivable is recorded against the revenue entry.
The journal Entry for this transaction will be as follow
DR. Account receivable xxx
CR. Revenue xxx
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Answer:
Maximum Dollar Increase = $10079.76
Explanation:
(See attachment for full question)
INCOME STATEMENT
Sales ---------- $67,000
Costs ---------- $43,800
EBIT ------------ $23,200
Taxes (34%) ----$7,888
Net income ------$15,312
BALANCE SHEET
Current Assets ------$31,000
Fixed Assets --------- $118,000
Total ------------------- $149,000
Long-term Debt -----$68,000
Equity ------------------- $81,000
Total ----------------- $149,000
Dividend Payout Ratio = 30%
Plowback Ratio is calculated by: 1 - Dividend Payout Ratio
Plowback Ratio = 1 - 30%
Plowback Ratio = 1 - 30/100
Plowback Ratio = 1 - 0.3
Plowback Ratio = 0.7
Plowback Ratio = 70/100
Plowback Ratio = 70%
Return on Equity (ROE) is calculated by: Net Income/Total Equity
Net Income = $15,132
Total Equity = $81,000
ROE = $15,132/$81,000
ROE = 0.186815
ROE = 18.68%
Calculating Sustainable Growth Rate (SGR)
SGR = (ROE * Plowback Ratio)/(1 - ROE * Plowback)
SGR = (0.186815 * 0.7)/( 1 - 0.186815 * 0.7)
SGR = (0.1307705)(1-0.1307705)
SGR = 0.1307705/0.8692295
SGR = 0.150444157728194
SGR = 0.1504
Max increase = (Sales * SGR)= ($67,000 * 0.1504)
Max Increase = $10079.75856778905
Max Increase = $10079.76
