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sleet_krkn [62]
3 years ago
6

Use the following information to answer the next two questions: Harris Company uses the allowance method of handling its credit

losses. It estimates credit losses at 1.5% of credit sales, which were $2,700,000 during the year. On December 31, the Accounts Receivable balance was $475,000, and the Allowance for Doubtful Accounts had a balance of $30,600 before adjustment. Indicate the effect (increase / decrease) that recording the bad debt expense for the year will have on the company's assets, liabilities, and equity, respectively. Assets Liabilities+ Equity Select one:
a. Decrease, No Change, Decrease
b. Increase, No Change, Decrease
c. Increase, No Change, Increase
d. Decrease, Decrease, No Change
e. Increase, Decrease, Increase
Business
2 answers:
barxatty [35]3 years ago
7 0

Answer:

a. Decrease, No Change, Decrease

Explanation:

This can be explained as follows

New Allowance for Doubtful Accounts = $2,700,000 × 1.5% = $40,500

Increase in Allowance for Doubtful Accounts = $40,500 - $30,600 = $9,900

The increase in the Allowance for Doubtful Accounts will reduce the Accounts Receivable balance by $9,900 because it will be added to the Allowance for Doubtful Accounts balance of $30,600 and affect Accounts Receivable as follows:

Accounts Receivable balance on December 31 after adjustment = $475,000 – ($30,600 + $9,900) = $434,500.

The increase of $9,990 in Allowance for Doubtful Accounts will decrease Accounts Receivable which an asset, and will also reduce equity because the $9,900 will be used to reduce the earning or retained earning which is an equity item. This does not and will not have any effect on the liability item.

Therefore, correct option is Decrease in asset, No Change in liabilities, Decrease in equity.

Arte-miy333 [17]3 years ago
4 0

Answer:

a)Decrease, No Change, Decrease

b) -Correct Answer is Option 'B' $ 403,900

--Workings

Accounts receivables, gross  $475,000

Less:  

Allowance account unadjusted balance $30,600  

Bad Debt Expenses [2700000 x 1.5%] $40,500  

Adjusted balance of Allowance account  $71,100

Net Realizable value of Accounts receivables [475000 - 71100] $403,900

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Blossom Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employ
Xelga [282]

Answer:

A) to determine the cost of the asset being depreciated we must use the first year's depreciation using the double declining method to find 40% of the asset's value:

40% of the asset's value = $29,200

asset's value = $29,200 / 40% = $73,000

B) salvage value = asset's value - total depreciation = $73,000 - $65,700 = $7,300

5 0
3 years ago
In the study of geomorphology, why do we primarily concentrate on processes rather than on distribution patterns by latitude?
4vir4ik [10]
In the study of geomorphology, processes like weathering and erosion are key to how the rocks will be sculpted by natural forces to produce interesting landforms like buttes and mesas for example. The distribution of geomorphological features like say the Amazon River by latitude is important but the process that shaped the landforms is more important as to how it got its present configuration.
5 0
3 years ago
The WeKnowThisStuff Company issued a $1,000 par value, 6% coupon, 8 year bond. The interest is paid semiannually and the market
Stella [2.4K]

Answer:

$1,032.01

Explanation:

Given:

Face value of bond (FV) = $1,000

Coupon rate = 6% annual rate or 6% / 2 = 3% semi-annual rate

Coupon payment (pmt) = 0.03 × $1,000

                            = $30

Rate = 5.5% annually or 5.5 / 2 = 2.75%

Time period (nper) = 8 × 2 = 16 periods

Current value of bond is present value of bond which can be computed using spreadsheet function =PV(rate,nper,pmt,FV)

So, present value of bond is $1,032.01.

PV is negative as it's cash outflow.

8 0
3 years ago
Select the correct answer.
34kurt

Answer:

I would say B

Explanation:

because like you need to be nice to everybody like its just the right thing to do and plus those existing customers might just be the ones who help u along the way u never know

hoped this helped lmk if it did

4 0
3 years ago
Illinois Company is attempting to develop the cost function for repair costs. The following past data are available: Machine Hou
Harlamova29_29 [7]

Answer:

$480

Explanation:

Data provided in the question:

Machine              Hours Repair Costs

2,400                       $6,385

1,200                        $3,480

2,000                       $5,285

3,400                       $8,980

Now,

                       Machine              Hours Repair Costs

Highest             3,400                       $8,980

Lowest              1,200                        $3,480

Difference        2,200                       $5,500

Unit variable cost =  $5,500 ÷ 2,200

= $2.5

Total cost at high level = $8,980

Machine hours highest level = 3,400

Also,

Total cost at high level = Fixed cost + Variable cost at highest level

or

$8,980 = Fixed cost + [ $2.5 × 3,400 ]

or

Fixed cost = $8,980 -  [ $2.5 × 3,400 ]

= $8,980 - $8,500

= $480

7 0
2 years ago
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