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Anna007 [38]
3 years ago
11

On February 1, a customer's account balance of $2,700 was deemed to be uncollectible. What entry should be recorded on February

1 to record the write-off assuming the company uses the allowance method? Multiple Choice Debit Bad Debts Expense $2,700; credit Accounts Receivable $2,700. Debit Bad Debts Expense $2,700; credit Allowance for Doubtful Accounts $2,700. Debit Accounts Receivable $2,700; credit Allowance for Doubtful Accounts $2,700. Debit Allowance for Doubtful Accounts $2,700; credit Accounts Receivable $2,700. Debit Allowance for Doubtful Accounts $2,700; credit Bad Debts Expense $2,700.
Business
1 answer:
Anvisha [2.4K]3 years ago
5 0

Answer:

On February 1, a customer's account balance of $2,700 was deemed to be uncollectible.

The entry to be recorded on February 1 to record the write-off assuming the company uses the allowance method is:

Debit Allowance for Doubtful Accounts $2,700; credit Accounts Receivable $2,700.

Explanation:

Using the allowance method, every bad debt entry is first reflected in the Allowance for Doubtful Accounts before it is taken to the bad debt expense account.

The entries above reduce the Accounts Receivable account by the amount of the write-off and reduces the Allowance for Doubtful Accounts by the same amount.  Any recovery of written off debt is also treated in the Allowance for Doubtful Accounts and the Accounts Receivable account in revised order.  This method is unlike the direct write-off method.  With the direct write-off method, the Accounts Receivable is credited with the amount of the write-off and the write-off is expensed in the Bad Debts Expense account directly.

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2 years ago
Johnny Cake Ltd. has 30 million shares of stock outstanding selling at $40 per share and an issue of $40 million in 8 percent, a
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WACC = 0.16637 OR 16.637%

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WACC or weighted average cost of capital is the cost of a firm's capital structure which can comprise of debt, preferred stock and common equity. The WACC for a firm with only debt and common equity can be calculated as follows,

WACC = wD * rD * (1-tax rate)  +  wE * rE

Where,

  • w represents the weight of each component based on market value in the capital structure
  • r represents the cost of each component
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To calculate WACC, we first need to calculate the Market value an cost of equity.

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The cost of equity can be found using the formula for Price today (P0) under constant growth model of DDM.

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40 * (r - 0.07) = 4

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r = 0.17 or 17%

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3 years ago
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Answer: $16.60

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The following information can be gotten from the question:

Total common equity = $4,050,000 Shares of stock outstanding = 265,000

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Based on the information given, the book value per share will be calculated as:

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