Answer:
what is the net realizable value of accounts receivable at the end of the year?
options: 217,000
Explanation:
Credit sales_______1000000
Cash Collections__ _1050000
Account Receivable__250000
Allowance begining___25000
Bad debt expense ____8000
Net realizable value__217000
Answer:
Option A,$72000
Explanation:
Bad debt expense is computed on the net credit sales amount, in other words, the bad debt expense is 12% of credit sales of $600,000.
Bad debt expense=$600,000*12%
=$72000
Option C is wrong because the answer was arrived at by calculating 12% of $750,000 the net sales amount that also has cash sales of $150,000 included in it($750000-$600000)
Option B is wrong as the amount of sales returns and allowances of $50,000 was deducted from $600,000 prior to applying 12% allowance for bad debt
<u>Solution and Explanation:</u>
We see that holding period return = (selling price/purchase price-1) =
Case 1: the simple return is calculated using the compounding
The Simple annual return is = (Future Value/Present Value ) ^ (1/t) -1
= 47.58 % (rounded to 2 decimal places)
Case 2: the simple return is calculated using the average
The Simple annual return = Holding period return divide by t = 600% divide by 5 = 120%
The answer is sunk cost
This incurred cost usually could not be recovered in any way.
For example, let's say for the business operation, you make a prepaid rent for a building for the whole year.
In this situation, the prepaid rent could be considered as a sunk cost because it's already incurred and not recoverable anymore