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BARSIC [14]
3 years ago
12

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 2% of credit sales will

be uncollectible. On January 1, Allowance for Doubtful Accounts had a credit balance of $3,300. During the year, Abbott wrote off accounts receivable totaling $2,300 and made credit sales of $113,000. There were no sales returns during the year. After the adjusting entry, the December 31 balance in Bad Debt Expense will be?
Business
1 answer:
kolezko [41]3 years ago
6 0

Answer:

$ 2,260

Explanation:

Since Allowance method is used,

Bad Debt Expense balance would be % estimated to be uncollectible.

Balance in Bad Debt Expense after adjusting entry would be

= $ 113,000 Credit sales x 2%

= $ 2,260

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4 0
3 years ago
Prepare Job-Order Cost Sheets, Predetermined Overhead Rate, Ending Balance of WIP, Finished Goods, and COGS At the beginning of
vova2212 [387]

Answer and Explanation:

1. The computation of overhead rate based on direct labor cost is shown below:-

Overhead rate = Overhead applied × 100 ÷ Direct labor cost

= 888 × 100 ÷ 1,200

= 74%

2. The Preparation of job-order cost sheet for the four jobs is shown below:

Particulars                Job 86        Job 87        Job 88        Job 89

Beginning balance $6,888       $6,820

Direct materials       $3,000      $7,000         $2,100          $1,500

Direct labor              $800          $6,000        $900            $500

Applied overhead  

is 74% of direct labor $592           $4,440       $666            $370

Total                          $11,280       $24,260      $3,666      $2,370

3. The computation of ending balances of Work in Process and Finished Goods is shown below:-

Work in process of Job 88 = $3,666

Finished goods = Total of Job 86 + Total of Job 89

= $11,280 + $2,370

= $13,650

4. The computation of the Cost of Goods Sold for March is shown below:-

Cost of goods sold is

= Job 87

= $24,260

7 0
3 years ago
Identify which basic principle of accounting is best described in each item below.
adelina 88 [10]

Answer:

The Matching Principle

Explanation:

The Matching Principle of accounting holds that revenues should be matched with expenses. Hence the name.

This is to say, that revenues should only be recognized when the associated expenses with those revenues have been spent.

For example, in numeral a), we can see that Norfolk Southern Corporation recieved cash in advance, but it only recognized revenue once it had performed the services associated with that cash collection.

4 0
3 years ago
You buy a stock for which you expect to receive an annual dividend of $2.10 for the fifteen years that you plan on holding it. a
kap26 [50]
<span>You are given an annual dividend of $2.10 for the fifteen years that you plan on holding it. Also, after 15 years, you are given to sell the stock for $32.25. You are asked to find the present value of a share for this company if you want a 10% return. You have to mind that the future stock for 15 years is $32.25. You are not only going to mind the present value of the annuity at $2.10 but also the $32.25.

With the interest of r = 10% and number of years of n = 15, we get
PVIFA = 7.6061.

For annuity we have,
$2.10 * 7.60608 = $15.973

For $32.35 with r = 10% and n = 15
PVIF = 0.239392

Thus for the present value of selling price,
$32.25 * 0.239392 = $7.720

Thus the present value of the share
P = $15.973 + $7.720
P = $23.693
</span>
6 0
3 years ago
Judy's Boutique just paid an annual dividend of $3.73 on its common stock. The firm increases its dividend by 3.40 percent annua
Talja [164]

Answer:

cost of equity = 12.16 %

Explanation:

given data

annual dividend of $3.73

increases dividend = 3.40 percent annually

stock price = $43.96 per share

to find out

What is the company's cost of equity

solution

we will use here Gordon model for compute company's cost of equity that is

market value = \frac{dividend* ( 1+growth\ rate)}{cost\ of\ equity - Growth\ rate}         ........................1

put here value we get

43.96 = \frac{3.73* ( 1+0.034)}{cost\ of\ equity - 0.034}

solve it we get

cost of equity =  0.121735

cost of equity = 12.16 %

8 0
3 years ago
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