It should be noted that When an investor uses the equity method to account for investments in common stock, cash dividends received by the investor from the investee should be recorded as deduction from the investor's share of the investee's profits.
<h3>What is an Equity method?</h3>
Equity method can be regarded as a process of treating investments when dealing with associate companies.
In this method, cash dividends received by the investor from the investee should be recorded as A deduction from the investor's share.
Learn more about Equity method at;
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Answer:
The adjusting entry to be made at the end of the current year to record its estimated bad debts expense will be:
Debit Bad debt expense $67,660
Credit Allowance for doubtful accounts $67,660
<em>(To record bad debt expense)</em>
Explanation:
The company uses the percent of sales method to determine its bad debts expense.
3.0% of credit sales ($2,210,000) = $66,300
Balance in Allowance for Doubtful Accounts $1,360 Debit
Required bad debt expense = $66,300 + $1,360 = $67,660
The addition of the opening debit balance is necessary in order to reinstate the allowance account to $66,300.
Answer:
Bank reconciliation for Candace Co. for May 31
Amount in $ Amount in $
Balance per Bank statement 2,936
Less;
Outstanding checks (465)
Add;
Deposits in transit 655
Bank charge 50
Erroneous check to supplier <u> 18</u> <u> 723</u>
Balance per cash account <u>3,194 </u>
Explanation:
The bank reconciliation is one done between the balance per the books and balance per the bank statement. This is usually as a result of transactions known as reconciling items.
These are items that have either been recognized in books but yet to be recorded by the bank or vice versa, transactions recorded wrongly by one of the parties etc.
The outstanding checks has been deducted from the cash book hence it will be deducted from the bank statement balance in the reconciliation statement.
The bank charges is yet to be recorded in the cash books as a deduction hence it will be added back to the bank statement balance in the reconciliation statement.
The bank deposit has been recorded as an inflow in the cash balance hence it will be added to the bank balance in the reconciliation statement.
The erroneous check amount difference
= $97 - $79
= $18
This will be added to the banks balance as it has been underdeducted in the cash balance in the reconciliation statement.
Answer: Under IFRS, preferred stock dividends are reported in the income statement as interest expense
Explanation:
Preference shares, also called preferred stock, are the shares of the stock of a company whereby dividends are paid to the shareholders before the dividends are being issued.
For this type of shares, even if the company goes bankrupt, the preferred stockholders will be paid from the assets of the company before the common stockholders.
Under IFRS, preferred stock dividends are reported in the income statement as interest expense
Answer:
the depreciable cost' of the machine is $480,000
Explanation:
The computation of the 'depreciable cost' of the machine is shown below:
Depreciable cost = Asset cost- Salvage value
= $500,000 - $20,000
= $480,000
Hence, the depreciable cost' of the machine is $480,000
We simply deduct the salvage value from the asset cost so that the depreciable cost could come