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9966 [12]
2 years ago
6

Big Cat Exploration erected an oil platform in a remote area of Texas at a cost of $10 million. Bit Cat is legally required to d

ismantle and remove the platform at the end of its useful life, which is expected to be 10 years. Big Cat estimates that the cost of dismantling and removing the oil rig will be $700,000. Assume that the appropriate discount rate is 8%. Required: Prepare the journal entry to record the acquisition of the oil platform.
Business
1 answer:
Verizon [17]2 years ago
5 0

Answer:

The $700,000 is an expense that will be incurred in 10 years from now. It howveer, needs to be accounted for in the present to show cost.

With a discount rate of 8% and 10 years as the period, the PV is,

= 700,000 / ( 1 + r) ¹⁰

= 700,000 / 1.08 ¹⁰

= 324,235.441659

= $324,235

Journal Entry becomes.

DR Oil Platform $10,324,235

CR Cash $10,000,000

CR Asset Retirement Obligation $324,235

(To record Oil Platform Acquisition)

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Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an in
kramer

Answer:

Allison should record the purchase at $5880

Explanation:

The net method for recording purchases implies that the purchases is recorded net of the envisaged cash discount on the transaction since the purchaser believes they would settle their account before the cash discount period expires.

Based on the above, the purchases would be recorded as shown below:

cost of purchase=original purchase value*(100%-discount rate)

original purchase price is $6,000

discount rate is 2%

cost of purchase=$6000*(100%-2%)

                           =$6000*98%

                            =$5880

4 0
3 years ago
Near the end of 2010, the ledger of Stivers Company included the following accounts and balances: Allowance for Doubtful Account
Minchanka [31]

Answer and Explanation:

The computation of the balances of the Allowance for Doubtful Accounts, Bad Debt Expense and Accounts Receivable is shown below;

For Accounts receivable  

a) Opening balance $200,000 Debit balance

b) Current year credit sales (75% of $800,000) $600,000 Debit balance

c) (-) Current collection from accounts receivables -$450,000 Credit balance

d) (-) Bad debt expenses -$11,000 Credit balance

e) Closing balance of accounts receivables $339,000 Debit balance

for Allowance for Doubtful Accounts  

Allowance required as per Current year analysis (2% of (75% of $800,000) $12,000 Credit balance

(-) Opening balance $1,000 Credit balance

$11,000 Credit balance

The journal entry is  

Bad debt expense a/c …Dr   11000  

      To Allowance for Doubtful Accounts 11000  

The Closing balance of Allowance for Doubtful Accounts 12000 Credit balance

For Bad debt expenses  

The journal entry is    

Bad debt expense a/c …Dr   11000  

      To Allowance for Doubtful Accounts 11000  

The Closing balance of Bad debt expense account 0

7 0
2 years ago
The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as fo
agasfer [191]

Answer:

Using LIFO:

TOTAL Sales : $19,875,500

COGS = $11,021,250

GROSS PROFIT = $8,853,750

Explanation:

KINDLY CHECK ATTACHED PICTURE

4 0
3 years ago
​Apple has made a success from anticipating what consumers would want in new technological advances, convenience, and ease of us
Nady [450]

Answer:

core competency

Explanation:

Based on the information provided within the question in regards to the situation at hand it can be said that the iPad was a core competency for Apple. This term refers to the use of a company's resources and skills to create something in order to set it apart and give the company a competitive advantage in a market. Which is exactly what the iPad did for Apple.

If you have any more questions feel free to ask away at Brainly.

7 0
3 years ago
Your $6100 investment grows to $12200 over the course of 9 years compounded quarterly. what interest rate did you receive on you
k0ka [10]
The formula is
A=p (1+r/k)^kt
A future value 12200
P present value 6100
R interest rate ?
K compounded quarterly 4
T time 9 years

Set the equation and solve for r (interest rate)
12200=6100 (1+r/4)^(4×9)
Divide both sides by 6100
12200/6100=(1+r/4)^(36)
2=(1+r/4)^(36)
Take the root of 36 for both sides
2^(1/36)=1+r/4
R= (2^(1/36)-1)×4
R=(2^(1÷36)−1)×4
R=0.0778×100
R=7.78%

Hope it helps!
6 0
3 years ago
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