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4 years ago

Explain how you use the Allowance method and Percent-of-Sales Method to account for uncollectibles.

Business

1 answer:

Ratling [72]4 years ago

7 0

Answer:

The entry to write off a bad account affects only balance sheet accounts: a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. No expense or loss is reported on the income statement because this write-off is "covered" under the earlier adjusting entries for estimated bad debts expense.

Explanation:

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Financial security begins with adequate insurance protection and a savings program. true or false

AleksAgata [21]

True becuase saving and insurance are safe

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3 years ago

Roy a director of service and sales corporations does not attend the board meeting for 3 years during that time Terry the firm's

iVinArrow [24]

The duty of loyalty.

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4 years ago

Vaughn Company has the following securities in its investment portfolio on December 31, 2020 (all securities were purchased in 2

vlabodo [156]

Answer:

Anderson Co. 3,100 shares at $18 per share

Munter Ltd. 10,200 shares at $57 per share

King Co. 5,600 preferred stock at $42 per stock

a. Prepare the entry for the security sale on January 15, 2021.

Dr Cash 58,880
Cr Investment in Anderson Co. stock AFS 52,200
Cr Realized gain on stock AFS 6,680

b. Prepare the journal entry to record the security purchase on April 17, 2021.

Dr Investment in Castle's stock AFS 38,160
Cr Cash 38,160

c. Compute the unrealized gains or losses.

unrealized gain = $40,800 (gain in Munter) - $11,200 (loss in King) - $13,960 (loss in Castle) = $15,640

d. Prepare the adjusting entry for Vaughn on December 31, 2021.

Dr Investment in Munter's stock 40,800
Cr Investment in King's stock 11,200
Cr Investment in Castle's stock 13,960
Cr Unrealized gain - other comprehensive income 15,640

4 0

3 years ago

A one-month European call option on a non-dividend-paying stock is currently selling for $1. The stock price is $47, the strike

REY [17]

Answer:

The price of the put-option on the same stock with the same strike price is $3.75.

Explanation:

To find the price of the put option on an underlying asset given the price on the call option's price for the same underlying asset with the same strike price is given, we apply put-call parity model.

Put call parity model: p = K x e^(-rT) + c - St .

in which: p: put option's price;

K: underlying asset's strike price;

r: risk-free rate;

T: time to maturity denominated in year;

c= call option's price;

St = spot price of underlying asset .

So, p = 50 x e^(-0.06 x 1/12) + 1 - 47 = $3.75 .

4 0

3 years ago

Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increa

Dafna1 [17]

Answer:

a) Incremental income after taxes:

•Additional sales--------------$156,000

•Accounts uncollectible

(5% of $156,000)-------------$7,800

• Annal revenue increment

(Ad sales-acts colectible)--$148,200

• Collection costs

(5% of $156,000)-----------------$7,800

• Production & selling costs

(73% of $156,000)-------------$113,880

• Annual income before tax

(Annual incremental rev -

Collection costs-prod.&sell

Costs)------------------------------$26,520

• Taxes at 20% -----------------$5,304

• Incremental income after

tax-----------------------------------$21,216

b) Incremental income on sales =

Incremental income/Incremental sales.

= (21216/156000)*100

= 13.60%

c) Receivable turnover =

Sales/Receivable

Receivables =

sales/receivable turnover

= 156000/3 = $52000

Based on the new average, incremental return will be:

(21216/52000) * 100

= 40.80%

4 0

4 years ago