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gtnhenbr [62]
3 years ago
10

During its first year of operations, Mack's Plumbing Supply Co. had sales of $3,250,000, wrote off $27,800 of accounts as uncoll

ectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1% of sales would be uncollectible.
Business
1 answer:
ArbitrLikvidat [17]3 years ago
3 0

Answer:

482.500

Explanation:

With the direct write-off method all accounts when detected as uncollectible, the amount of the client's debt is charged to the expense, while an estimate is made with the allowance method (this method is the most accepted accounting)

The direction of these methods in this case is translated in this way

allowance method 3,250,000 X 1% = 32,500.

Direct writte off 27,800

The difference between these values, which is 4,700, corresponds to a higher forecast, therefore, to a higher expense for the year, so that the net result will be reduced

Net result 487,500 minus 4,700 = 482,800

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City Auto Parts recently traded in store fixtures. The exchange had commercial substance. The old fixtures had a cost of $48,000
IRISSAK [1]

Answer:

The correct option is true

Explanation:

The book value of the old fixtures at the date of exchange which is the cost less accumulated depreciation till date is computed thus:

Book value of old fixtures=$48,000-$14,000=$34000

Expected cash payable by the company for the new fixtures is the market value of the new fixtures minus the carrying value of the old fixtures.

Expected cash=$117,000-$34,000=$83,000.00  

Loss on the exchange =cash paid -expected cash payable=$101,000-$83,000=$18000

5 0
3 years ago
Analytical procedures are audit methods of evaluating financial statement accounts by studying and comparing relationships among
puteri [66]

Answer:

identify conditions to be explored all the more altogether

Explanation:

Analytical procedures are used in reviews and are generally an important part in comparing data. Analytical procedures include correlations of various  monetary and operational data, to check whether authentic connections are proceeding ahead into the period under audit. It also helps to understand the client's business operations in detail, and it also assist in identifying the changes required.

7 0
3 years ago
You have a portfolio that is invested 24 percent in Stock R, 38 percent in Stock S, and the remainder in Stock T. The beta of St
Nady [450]

Answer:

1.90

Explanation:

The computation of the beta of the stock T is shown below:

Portfolio beta = Invested percentage in stock R × beta of Stock R + Invested percentage in Stock S × Beta of stock S + Invested percentage in Stock T × Beta of Stock T

1.37 = 0.24 × 0.71 + 0.38 × 1.26 + 0.38 × Beta of Stock T

1.37 = 0.1704 + 0.4788 + 0.38 × Beta of Stock T

1.37 = 0.6492  + 0.38 × Beta of Stock T

0.7208 = 0.38 × Beta of Stock T

So, the beta of stock T is 1.90

4 0
3 years ago
​Lydia, a minor, charges the cost of a smartphone at a Mobile Devices & Minutes store. Two nights later, Lydia loses the pho
MatroZZZ [7]

Answer:

A)​ if it is deemed a necessary good

Explanation:

Minors are not usually bound by a contract, and most of the time they can avoid liability under a contract. Minors can only sign a valid contract if it includes something that is essential for them. Medicines, food and medical services are the only things that are usually considered essential for a minor.

So the store has to prove that selling her the cell phone was a necessity, and something essential for her. It is possible to prove that it was a necessity, but it is something very difficult to do.

But the fact that the contract is not valid doesn't mean that Lydia can do whatever she wants. Her parents are responsible for returning the cell phone or since she lost it, they are responsible for paying it.

6 0
3 years ago
The Acme Corporation has been acquired by the Conglomerate Corporation. To help finance the takeover, Conglomerate is going to l
vovangra [49]

Answer:

The one-year liquidity index for these securities is 0.862

Explanation:

For computing the liquidity index, we have to use the formula which is shown below:

= (IBM stock face value ÷ total amount of face value) × (IBM current liquidation value ÷ IBM one year liquidation value) + (GE stock face value ÷ total amount of face value) × (GE current liquidation value ÷ GE one year liquidation value) + (Treasury securities stock face value ÷ total amount of face value) × (Treasury securities current liquidation value ÷ Treasury securities one year liquidation value)

where,

total amount of face value = IBM stock face value + GE stock face value + Treasury securities face value

= $15,000 + $6,000 + $20,000

= $41,000

Now put these values to the above formula

= ($15,000 ÷ $41,000) × ($14,900 ÷ $15,500) + ($6,000 ÷ $41,000) × ($3,000 ÷ $3,400) + ($20,000 ÷ $41,000) × ($15,000 ÷ $19,000)

= 0.365 × 0.961 + 0.146 × 0.882 + 0.487 × 0.789

= 0.350 + 0.128 + 0.384

= 0.862

Hence, the one-year liquidity index for these securities is 0.862

8 0
3 years ago
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