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loris [4]
2 years ago
10

Douglas International consistently estimated its bad debt expense at 2 percent of credit sales. In 2020, however, Douglas determ

ines that it should revise downward the estimate of bad debts for the current year’s credit sales to 1.5 percent. Douglas uses the revised estimate of 1.5% and calculates bad debt expense of $420,000. How is the change in the estimated bad debt expense reported in Douglas’ 2020 financial statements?
Business
1 answer:
Anastaziya [24]2 years ago
4 0

Answer: $420,000 of expense in the income statement as an ordinary item. Douglas’ accounts for this change in estimate in the period of change by reporting the newly calculated amount of bad debt expense as an ordinary item of income. Changes in estimate are not considered an extraordinary item, an error correction, or a change in accounting principle.

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Josephine quits her $40,000 a year job to start her own business. She rents an office for $15,000 a year, pays wages and salarie
Sliva [168]

Answer:

b. $51,000 and $5000.

Explanation:

According to the scenario, computation of the given data are as follows,

Total Revenues = $140,000

Explicit cost = $15,000 + $50,000 + $4,000 + $20,000 = $89000

Implicit cost (opportunity cost) = $40,000 + $6,000 = $46,000

So, we can calculate accounting profit and economic profit by using following formula,

Accounting Profit = Total revenue - Explicit cost

By putting the value, we get

= $140,000 - $89,000

= $51,000

Economic Profit = Total revenue - Explicit cost - Implicit cost

By putting the value, we get

= $140,000 - $89,000 - $46,000

= $5,000

3 0
3 years ago
Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in
expeople1 [14]

Answer:

Option D. $6.25 Million

Explanation:

The Free Cash Flow can be calculated using the following formula (Ignoring investment):

Free Cash Flow = (Revenue - Operating Expenses)   Minus  Tax

Here

Revenue is $20 Million

Operating Expenses are $12 Million

And

Tax is not given however tax rate is given which is 35% here. For tax purposes, we will assume that the depreciation is tax allowable expense, so

Tax = (Revenue - Operating Expenses - Depreciation) * Tax rate

By putting values we have:

Tax = ($20m - $12m - $3m) = $1.75 Million

The cash impact is taken while calculating the Free cash flow. This free cash flow method is also used in IRR, NPV, discounted payback method, etc.

By putting values in the above bold equation, we have:

Free Cash Flow = ($20m - $12m) - $1.75 = $6.25 Million

8 0
3 years ago
Many consumers buy soft drinks and potato chips together when they shop at a grocery, convenience, or mass merchandiser store. B
Kryger [21]

Answer:

data mining

Explanation:

In business, Data mining is the act of obtaining information about customer's behavior that might be use for the company's benefit.

On most cases, Data mining is used to predict the behavior of a certain group of customers. By creating this prediction, the company could create a product or marketing strategy that can efficiently target that group.

in the excerpt above,

The shop obtain the data that a lot of consumers who bought sandwich also bought toothpaste a long with it.

From this data, the shop could make assumption that there is a correlation between the sandwhich and the tooth paste. (Maybe many of sandwhich buyers need the toothpaste to remove the sandwich's smell from their mouth). The shop could use this data and arrange the placement of the toothpaste so it's close to the sandwhich with the hope that it might increase its sales.

3 0
3 years ago
Suppose that a consumer has a marginal propensity to consume of 0.7. If this consumer earns an extra $2, her consumption spendin
inn [45]

Answer:

Her consumption spending will rise by $1.40

Explanation:

Marginal propensity to consume is 0.7. This information means that the individual will consume 70% of every single dollar she earns. Hence, if she consumer earns an extra $2, her consumption spending will rise by $1.40

5 0
3 years ago
Differentiate the Single and Double Entry Book-Keeping in your own words. Furthermore, briefly explain the objectives of Double
Olegator [25]

Answer:

See below

Explanation:

A single entry book keeping is when a cash book is being maintained to record income and expenses. In a single entry book keeping, only one entry is made per transaction like we have in check register.

Double entry book keeping is when an accounting entries have two sides, debit and credit leg. The right hand side is the debit while the left side is the credit.

Objectives of double entry book keeping

• To provide accurate recording of business transactions to management

• When there are problems in financial matters, book keeping assist in solving this problems through its systematic record of financial transactions .

• Book keeping also provide information to the management for making plans and decisions relating to finances.

4 0
3 years ago
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