Answer:
The correct answer is True.
Explanation:
Retained earnings are those net profits that the company decides not to distribute as dividends among its shareholders.
The retained earnings are dedicated to reinvestment in the form of equipment, research and development and other elements such as paying financial obligations. One of the purposes, in addition, is to preserve the liquidity of the company.
Many companies resort to retained earnings as a way to finance the company, as it is an effective way to avoid the outflow of money and have to resort to new obligations (that is, more indebtedness).
Answer:
Increases; More
Explanation:
Given that,
Current exchange rate:
$1 = 1 euro
Expected exchange rate:
$1 = 1.20 euros
The above exchange rate indicates that there is an appreciation in value of dollar and a depreciation in the value of euro. An appreciation of a dollar will lead to increase the demand for dollar because people expect that holding dollar is more profitable than euro.
With the expected exchange rate, a europian resident have to pay more for per dollar purchase in future as compared to the current exchange rate.
Answer:
July 1, 2020
Dr. Account Receivable $56,000
Cr. Sales $56,000
July 9, 2020
Dr. Cash $54,880
Dr. Sales Discount $1,120
Cr. Account Receivable $56,000
Explanation:
Credit terms of 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.
As Payment of $56,000 is received within the discount period. So, the discount will be
Discount = $56,000 x 2% = $1,120
Amount Paid = $56,000 - $1,120 = $54,880
Addition to Retained Earnings will be the amount will be Net Income as calculated using the above information:
Net income will be calculated as below:
Sales...........................................................$680000
Less: Cost of Sales.................................$342000
Less: Depreciation..................................$86000
Less: Interest Expense.........................$53000
Earnings Before Tax...............................$199000
Less [email protected] 23%.........................................$45770
Net Income..............................................$153230
Thus Income of $153230 will be added to Retained earnings and Cash dividend of $40000 will be reduced from therein.
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