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slega [8]
3 years ago
6

Ayayai Corp. uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,

000 and credit sales are $1,000,000. Management estimates that 4% of accounts receivable will be uncollectible.
What adjusting entry will Ayayai Corp. make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?

a. Bad Debt Expense 8,000; Allowance for Doubtful Accounts8,000
b. Bad Debt Expense 6,000; Allowance for Doubtful Accounts 6,000
c. Bad Debt Expense 6,000; Accounts Receivable 6,000
d. Bad Debt Expense 8,000; Accounts Receivable 8,000
Business
1 answer:
Ket [755]3 years ago
5 0

Answer:

Option (B) is correct.

Explanation:

Amount of which adjusting entry required:

= Amount of uncollectible accounts - Balance in Allowance for uncollectible accounts

= (Balance in accounts receivable × Estimated percentage of accounts receivable to be uncollectible) - Balance in Allowance for uncollectible accounts

= ($200,000 × 4%) - $2,000

= $8,000 - $2,000

= $6,000

Therefore, the adjusting entry is as follows:

Bad debt expense A/c      Dr.  $6,000

To Allowance for uncollectible accounts    $6,000

(To record the bad debt expense)

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Answer:

$26,110

Explanation:

See attached file

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2 years ago
The primary difference between the capital adequacy ratio (car) and the leverage ratio (lr) is?
Ainat [17]

The capital adequacy ratio (CAR) calculates a bank's available capital as a proportion of its risk-weighted credit exposures. The capital adequacy ratio, is commonly known as the capital-to-risk weighted assets ratio (CRAR). A leverage ratio is any of a number of financial metrics that examine the amount of capital that is borrowed (loans).

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5 0
1 year ago
XYZ Company earned operating income of $1,500,000 before income taxes. Capital employed equaled $10,000,000, of which $1,000,000
m_a_m_a [10]

Answer:

The answer is creating wealth, with the economic value added is $390,000

Explanation:

The company WACC is: Percentage of mortgage bond in capital employed x Cost of mortgage bond x ( 1 - tax rate) + Percentage of unsecured bond in capital employed x Cost of unsecured bond x ( 1 - tax rate) + Percentage of common stock in capital employed x cost of common stock

In which:  Percentage of mortgage bond in capital employed = 1,000,000/10,000,000 = 10%

Percentage of unsecured bond in capital employed = 3,000,000/10,000,000 = 30%;

Percentage of common stock in capital employed = (10,000,000 - 1,000,000 - 3,000,000) /10,000,000 = 60%

Cost of common stock = Risk free rate + Risk premium = 10% + 5% = 15%;

Tax rate = 40%

Thus, WACC = 10% x 8% x ( 1- 40%) + 30% x 9% x (1-40%) + 60% x 15% = 11.10%.

Thus, Capital cost per year: Capital employed x WACC = 10,000,000 x 11.10% = $1,110,000.

Economic value added = Operating Income - Capital cost = 1,500,000 - 1,110,000 = $390,000.

3 0
3 years ago
Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost f
Anit [1.1K]

Answer:

$248,600

Explanation:

The computation of amount of manufacturing overhead is shown below:-

Amount of manufacturing overhead would have been applied = Predetermined overhead rate × Actual direct labor-hours

= $22.60 × 11,000

= $248,600

Therefore for computing the amount of manufacturing overhead we simply multiply the Predetermined overhead rate with Actual direct labor-hours

5 0
2 years ago
As he explores his options, Sergio notices that some opportunities appear to be riskier than others. When considering various op
Margarita [4]

Answer:

His risk profile.

Explanation:

When comparing various option , Sergio must understand his risk profile and choose the option according to it.

8 0
3 years ago
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