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KengaRu [80]
3 years ago
11

Aurora Corporation operated without insurance coverage for the first month of operations. Then, on February 1, the company paid

the $4,800 premium on a two-year insurance policy with benefits beginning on that date. The company uses the accrual basis. How much insurance expense will be reported on the company's income statement for their first year ended December 31?a. $200 b. $2,200 c. $4.600 d. $4,800
Business
1 answer:
irina1246 [14]3 years ago
5 0

Answer:

Answer:

Correct answer is letter B, $2,200

Explanation:

Using accrual basis method, revenue and expenses will be recognized when incurred whether paid (expenses) nor collected (revenues).

The $4,800 is a 24 months policy, therefore we must compute the insurance expense applicable for the year covering from February 1 to December 31 (11 months)

$4,800 divided by 24 months = $200 insurance per month multiply by 11 months expired portion (February 1 to December 31) = $2,200.

An adjusting entry to recognize the expire portion of the insurance must be done at the year end in the amount of $2,200.

($4,800 / 24 months = $200 x 11 months = $2,200)

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3 years ago
Crane WaterWorks manufactures snorkel gear. During the past month, Washington purchased 4,130 pounds of plastic to use in its di
goldfiish [28.3K]

Answer:

Direct material price variance= $53.69 unfavorable

Explanation:

Giving the following information:

Actual purchase= 4,130 pounds of plastic

Actual cost= $5,972 (total)

The standard price for the plastic is $1.433 per pound.

The company used 4,060 pounds of the plastic to produce 18,500 dive masks.

To calculate the direct material price variance, we need to use the following formula:

Direct material price variance= (standard price - actual price)*actual quantity

Actual price= 5,972/4,130= $1.446

Direct material price variance= (1.433 - 1.446)*4,130= $53.69 unfavorable

5 0
3 years ago
A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. The
faltersainse [42]

Answer:

$80,000

Explanation:

Given that the sales revenue = $1000000

Labor= $600,000

Capital= $150,000

Materials =$200,000

Total expenditure= $(600,000+150,000+200,000)=$950,000

Profit=$1000,000-$950,000=$50,000

Income from renting the space for a year=$30,000

Total economic profit last year= $50,000+$30,000 =$80,000

4 0
3 years ago
During 2019, a company purchased a mine at a cost of $4,324,000. The company spent an additional $760,000 getting the mine ready
goldenfox [79]

Answer: d. The book value of the mine decreased $573,400 during 2014.

Explanation:

Book value of the mine is:

= Cost + Amount spent to make mine ready

= 4,324,000 + 760,000

= $5,084,000

The depreciation for this mine will be done based on the amount of minerals removed per year from the estimated total. It will be based on the depreciable value which is the book value net of the residual value.

In year 2014, depreciation is:

= Proportion removed * (Book value - Residual value)

= 61,000 / 460,000 * (5,084,000 - 760,000)

= $573,400

5 0
3 years ago
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