1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
pishuonlain [190]
3 years ago
6

Time period is important in accounting. Companies need to report revenue and expenses on their income statement based on what th

ey earned and incurred during the accounting period. Assume the company had invested $100,000 in an interest-bearing investment on September 1st of this year. The investment earns 6% interest, but the interest doesn't get paid out until the end of the first six months. What, if any, interest revenue should the company record on their December 31st year ending income statement of this year
Business
1 answer:
BaLLatris [955]3 years ago
6 0

Answer: $2,000

Explanation:

The question alludes to the Accrual principle of Accounting that states that companies need to report revenue and expenses on their income statement based on what they earned and incurred during the accounting period.

The investment is to earn 6% annually which means that every year it is to show returns of;

= 6% * 100,000

= $6,000

On a monthly basis therefore this should be;

= 6,000 / 12

= $500

They invested on September 1st which means that they would have been invested for 4 months by December 31.

The interest for the year is therefore;

= 4 * 500

= $2,000

You might be interested in
34s left The National Income Accounts Unanswered GNP equals GDP A. minus net receipts of factor income from the rest of the worl
ra1l [238]

Answer:

D. plus net receipts of factor income from the rest of the world

Explanation:

Gross national product (GNP) is the value of all final goods and services produced by a country's residents both at home and abroad.

GNP = Consumption + Investment + Government + Net Export + Net factor income from abroad

6 0
3 years ago
Indiana Co. bega n a construction project in 2018 with a contract price of $150 million to receive when the project completed in
Liula [17]

Answer: C) Recognized $9 million gross profit on the project in 2018.

Explanation:

Duration of construction project from 2018 to 2020 = 3 years

Cost incurred by Indiana co. in 2018 = $36 million

Estimated additional cost for the remainder of the project = $84 million

Total cost to be incurred over the duration of the project = $36 million + $84 million = $120 million

To calculate the percentage of the project completed, we use the cost figures;

Cost incurred so far (in 2018) ÷ Total cost to be incurred × 100

36,000,000/ 120,000,000 × 100 = 30%

Total revenue from contract (which is the contract price) = $150 million

Indiana Co. recognizes revenue according to the percentage of the project completed. Therefore, revenue recognized after 30% of the project is completed (which is the revenue for 2018) = 30% of $150,000,000

Revenue for 2018 = 30/100 × 150,000,000 = $45,000,000

Profit recognized on the project in 2018 = Revenue for 2018 - Cost incurred in 2018

Profit = $45,000,000 - $36,000,000

Gross profit recognized in 2018 = $9,000,000

5 0
3 years ago
What happens to the money supply during inflation? *
Vikki [24]
The link between Money Supply and Inflation. ... Increasing the money supply faster than the growth in real output will cause inflation. The reason is that there is more money chasing the same number of goods. Therefore, the increase in monetary demand causes firms to put up prices.
6 0
3 years ago
You must estimate the intrinsic value of Noe Technologies’ stock. The end-of-year free cash flow (FCF1) is expected to be $27.50
emmasim [6.3K]

Answer:

= $52.78 per share

Explanation:

<em>The value of a business can be determined using the free cash flow model. According to this model, the value of a firm is is the present value of its free cash flow discounted at the weigthed average cost of capital (WACC.)</em>

<em>The value of equity is the value of firm less value of other instruments (e.g debt and preferred stocks)</em>

<em>Value of equity = Value of the entire firm - Value of debt </em>

We can work out the the value per share using the steps below:

<em>Step 1</em>

<em>Calculate the total value of the firm</em>

Value of firm =  27.50/(0.1-0.07)

 = $916.66 million

<em>Step 2</em>

<em>Calculate the value of equity</em>

<em>Value of equity = Value of the entire firm - Value of debt</em>

= $916.66 million - $125.0 million

=791.666 million

<em>Step 3</em>

<em>Calculate the value per share</em>

Value per share = Value of equity/ units of common stock

=$791.666 million/15 million units

= $52.78 per share

3 0
3 years ago
The equity method with consolidation is used to account for long-term investments in equity securities with controlling influenc
pashok25 [27]
I go with true................

4 0
3 years ago
Other questions:
  • A domestic manufacturer of watches purchases quartz crystals from a Swiss firm. The crystals are shipped in lots of . The accept
    13·1 answer
  • A consumer is reading a magazine with an advertisement, but due to a loud sound he is distracted from reading the advertisement
    6·1 answer
  • New corporation had net income for 2016 of​ $80,000. new corporation had​ 13,000 shares of common stock outstanding at the begin
    13·1 answer
  • Owens Finest Mattress Co., Inc. decided to employ an anti-mission statement. Which of the following phrases did they use?
    13·2 answers
  • The method that uses a certain percentage of each year's net sales to estimate the uncollectible account is called the:
    6·1 answer
  • Petra's Programming competes on cost with WonderWeb in the web design industry. Both firms operate on a 90 percent learning curv
    13·1 answer
  • Pestel analysis for security industry in uk
    6·1 answer
  • How pay for workers is determined?
    6·1 answer
  • The time for one rotation of the Moon is 27.3 days. What is the time revolution for the Moon?
    5·2 answers
  • . Research: Using reputable and recently published internet sources, research the
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!