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horrorfan [7]
3 years ago
12

In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method.

At December 31, 2017, B & B’s inventories were $32 million (FIFO). B & B’s records indicated that the inventories would have totaled $23.8 million at December 31, 2017, if determined on an average cost basis. Ignoring income taxes, what journal entry will B & B use to record the adjustment in 2018? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
Business
1 answer:
Sati [7]3 years ago
3 0

Answer:

In Barton and Barton Company's general journal, entry required include:

Debit Retained Earnings Account with $8.2 million

Credit Opening Inventory with $8.2 million

Being reversal of overstated inventory due to change from FIFO to Average cost method.

Explanation:

The debit entry to the Retained Earnings Account will reduce the balance by $8.2 million.  The effect of overstating the closing inventory is overstatement of the net income because the cost of sales was understated as a result of the inventory overstatement.

The credit entry to the Opening Inventory reduces the balance to the new balance based on the average cost method of $23.8 million.

The FIFO cost method or First-In, First-Out method is an inventory costing method that assumes that goods that were bought first were the ones to be sold first.  The inventory cost is therefore valued with the most recent quantity and cost price.

On the other hand, the Average Cost Method, also called the Weighted Average Cost Method, calculates the inventory cost by adding all the period's inventory and dividing it by the quantity for the period.  This gives an average cost which is in turn used to multiply the quantity of inventory at the end of the period to obtain the inventory cost.

Both methods are estimates that produce different results and affect the reported net income differently.  There is always the need for consistency in choosing the method to apply so that reported net income is not unduly distorted.

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An optimizing consumer will select the consumption bundle in which the :
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Answer:

c. marginal rate of substitution is equal to the relative price ratio of the goods.

Explanation:

we know that the costomer MRS = Px/Py , where x and y are the two goods.

MRS(x,y) = MUx/MUy = Px/Py

Therefore, The marginal rate of substitution is equal to the relative price ratio of the goods.

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3 years ago
Ed's Print Shop received an invoice dated May 10 for $2,500 with terms 3/10, 1/15, n/60. On May 22, Ed's Print Shop sent a parti
artcher [175]

Amount to be credited = $2,020

Outstanding balance = $480

Explanation:

The payment terms state that

  • 3% discount may be taken within 10 days of the invoice date (up to May 20); or  
  • 1% discount may be taken within 15 days of the invoice date (after May 20 but not later than May 25); or
  • The net amount is due within 60 days of the invoice date if advantage is not taken of the cash discounts offered.
  • The  3% cash discount is not applicable as the payment was made on May 22 which is after the end of the discount period. However, the 1% discount is allowed, since payment on May 22 is within the 15-day period for the 1% discount.

Amount to be credited

= 2000 / (1−0.01)

= 2000 / (0.99)

= $2,020

Outstanding balance

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3 years ago
Use what you have learned about demand to answer the question. Based on the law of demand, when the price of a specific good dec
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Answer:

The answer is: It will increase.

Explanation:

According to the law of supply and demand, when the price of an specific good or service decreases, the quantity demanded for that good or service will increase.

For example, if the price for a movie ticket is $10, 100 people will go to the movies. If the movie theater starts a promotion and lowers the price for movie tickets to $6, many more customers will be willing to go the movies. Either because they believe watching a movie in the theater is worth 6$ or more, or because they will now be able to afford going to the theater.  

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3 years ago
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Find the effective rate of interest if payments of 300 at the present, 200 at the end of one year, and 100 at the end of two yea
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Answer:

12.93%

Explanation:

Given that the amount of 300 is invested for 3 years, while the amount of 100 is invested for 2 years and 100 is invested for 1 year.

also amount accumulated in three years = 800

Applying the formula to find the future value we get

300(1+r)^3 + 200(1+r)^2 + 100(1+r) = 800

which can be further simplified to

300r^3+1100r^2+1400r+600=800

where, r is the effective rate of interest which we have to find out

The above equation is cubic in r, so to solve this we can use equation solver. When we put this equation in equation solver we get

r = 0.12926

r ≅ 0.1293

Therefore,  effective rate of interest  = 12.93%

7 0
2 years ago
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