Answer:
A share of this stock be worth$ 21.88 four years from now
Explanation:
Amount of annual dividend that will be paid the next year = $ 2.05
increase in dividend by 3.5% = 
= increase by a factor of 1.035
Since there is a 14% return, overall increase in dividend = 
= 9.857
<em>Note:</em>
<em>0.035 was obtained from </em>
<em>= 0.035 (dividend increase)</em>
<em>0.14 was obtained from </em>
<em> = 0.14 (percentage return required)</em>
over the next 20 years his new value of dividend will be
New value of dividend = $2.05 + 9.857 = 11.907
Converting to a percentage,
= 1.1907
Net dividend increase =
Dividend returns minus increase in dividend for 20 years is given as
14% - 3.5% = 10.5%
From the above, the
Worth of a share of his stock 4 years from now can be computed by
(dividend X Percentage increase in 20 years)/ net percent dividend increase + (increase in 4 years/ net dividend increase) X 100
+ 
× 100 =$21.88
∴ A share of this stock be worth$ 21.88 four years from now
Answer:
It will increase expense, thereby reducing the profit mentioned in the income statement and decrease the current asset (debtor) recorded in the balance sheet.
Explanation:
Bad Debt is an expense that is recorded when it is expected that the customer, who owes a debt to the business, might default in clearing their dues.
As such when the bad debt amount is increased it will result in a rise in expense and therefore the profit, as stated in the profit and loss (income statement) of the sole trader would decrease.
Moreover, it will also decrease the value of trade receivables (current assets) mentioned in the balance sheet. The following entry would be recorded:
Bad Debts (Dr) xxxxx
Trade Receivables (Cr) xxxxxx
Hence, the expenses will increase while the current asset will decrease.
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