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Allushta [10]
3 years ago
12

M8-1 Evaluating the Decision to Extend Credit [LO 8-1 Nutty Productions Inc. generated service revenue of $48,000 and income fro

m operations of $19,000. The company estimates that, had it extended credit it would have instead generated $87,000 of service revenue, but it would have incurred $34,000 of additional expenses for wages and bad debts. 1-a. Using these estimates, calculate the amount by which Income from Operations would increase (decrease) Income from Operations by 1-b. Should the company extend credit? Yes No
Business
1 answer:
emmasim [6.3K]3 years ago
7 0

Answer:

Yes

Explanation:

In this question, we have to compare the total income based on credit extended The computation is shown below:

If credit is not extended, then the total income would be

= Service revenue + income from operations

= $48,000 + $19,000

= $67,000

If credit is extended, then the total income would be

= Service revenue + income from operations - additional expenses for wages and bad debts

= $87,000 + $19,000 - $34,000

= $72,000

Yes the company extend credit as the total income is increased by $5,000

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P. Jameson Co. sold $500 of merchandise on Master Card credit sales. The net cash receipts from the sale are immediately deposit
Alchen [17]

Answer:

The journal entry would be as follows:

Account                                  Debit           Credit

Cash                                       $480

Sales Revenue                                           $500

Credit Card Expense                                 $20

The Credit Card Expense corresponds to the 4% fee that Master Card charged P. Jameson Co. ($500 x 20% = $20)

4 0
3 years ago
The corporate charter of Torres Corporation allows the issuance of a maximum of 4,000,000 shares of $1 par value common stock. D
sergey [27]

How many shares were authorized?

Number of shares authorized are 4,000,000

--------

How many shares were issued?

Number of shares issued are 2,080,000

--------

How many shares are outstanding?

Number of shares outstanding = Number of shares issued - Numberof shares repurchased

Number of shares outstanding = 2,080,000 - 80,000

Number of shares outstanding = 2,000,000

--------

What is the balance of the Common Stock account?

Balance of common stock = Number of shares issued * Parvalue

Balance of common stock = 2,080,000 * $1

Balance of common stock = $2,080,000

--------

What is the balance of the Treasury Stock account?

Balance of treasury stock = Number of shares repurchased * Priceper share

Balance of treasury stock = 80,000 * $25

Balance of treasury stock = $2,000,000

--------

2)

June 12:  Issued 50,000 shares of $3 stated value common stock for cash of $250,000.

Cash; 250,000

Paid-In Capital in Excess of Par--Common Stock 50,000 x 3 = 150,000

Common Stock: 100,000

July 11:  Issued 2,000 shares of $100 par value preferred stock for cash at $108 per share.

cash: 2000 x 108 = 216,000

preffered stock : 2,000 x 100 = 200,000

Paid-In Capital in Excess of Par--Preferred Stock : 16,000

Nov. 28: Purchased 2,000 shares of treasury stock for $10,000.

Treasury Stock 10,000

Cash 10,000

6 0
3 years ago
We are evaluating a project that costs $744,000, has a six-year life, and has no salvage value. Assume that depreciation is stra
yawa3891 [41]

Answer: $15,400

Explanation:

BEP = Fixed cost - depreciation/ sales - variable cost

BEP = 740,000 - (744,000/6)/($60 -$20)

BEP= $740,000-$124,000/$40

BEP = $616,000/$40

BEP =$15,400

8 0
3 years ago
The accountant for Eva's Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the
amm1812

Answer:

See the errors identified below.

Explanation:

Note: The data in this question are merged together. They are therefore sorted before answering the question. See the attached pdf file for the complete question with the sorted data.

The explanation of the answer is now given as follows:

The following errors can be identified in the accountant's adjusting entries:

1.The accountant debited the account receivable for $5,000 (i.e. $23,250 - $18,250 = $5,000) without crediting laundry revenue.

Therefore, we should have:

Correct amount of laundry revenue = Laundry revenue in trial balance + (Adjusted account receivable - Unadjusted account receivable) = $182,100 + ($23,250 - $18,250) = $187100

2. The accountant debited laundry suppliers expense instead of crediting laundry suppliers for $3,000.

3. The the accountant credited Prepaid insurance for $3,600 (i.e. $5,200 - $1,600 = $3,600). However, the insurance expense was debited for $600.

4. Instead of crediting accumulated depreciation, the laundry equipment for depreciation expense was erroneously credited by the accountant for $13,000.

5. A debit of $1,000 to wages expense was not made by the accountant.

<u>Additional Note:</u>

After correcting the errors identified above, the correct adjusted trial balance will look as the one in the attached photo.

5 0
3 years ago
For Bonita Sports Corporation, year-end plan assets were $4,250,000. At the beginning of the year, plan assets were $3,974,000.
OverLord2011 [107]

Answer:

Explanation:

Year-end plan assets were $4,250,000

At the beginning of the year, plan assets were $3,974,000

So Actual Return on Plan Assets = (4,250,000 - 3,974,000) - (420,000 - 365,000)

Actual Return on Plan Assets = 276,000 - (55,000)

Actual Return on Plan Assets = 221,000

6 0
3 years ago
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