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fredd [130]
2 years ago
8

Kelton Inc. purchases inventory for $2,000 and incurs shipping costs of $100. To record this transaction, the company debits Inv

entory for $2,000, debits Selling Expenses for $100, and credits Cash for $2,100. Which of the following statements is correct?A. Revenues are understated.
B. Net income is overstated.
C. Assets are understated.
D. All accounts are accurately stated.
Business
1 answer:
prisoha [69]2 years ago
8 0

Answer:

C. Assets are understated

Explanation:

In terms of IAS 2, Inventory cost include, the <em>purchase cost</em> , <em>conversion cost</em> and all <em>other costs directly related</em> to bringing the inventory in the correct location and condition intended for sale by the company.

The Company has not included <em>shipping costs</em> of $100 to inventory cost, hence inventory is understated and consequently this overstates the <em>cost of goods sold</em> and understate the Inventory , gross profit and net income by $100

Selling Expenses have been accounted for in error, therefore<em> Operating Expenses</em> are Overstated and <em>Net Income</em> understated by $100

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Buyer Bill will receive a utilities bill for an estimated $300 at the end of the month. At closing, the seller has used an estim
liraira [26]

Answer:

b) a debit to the seller and credit to the buyer for $100

Explanation:

The portion of the utilities bill consumed by the seller is not to be borne by buyer Bill, he cannot be made to pay for what he did not consume, the correct treatment is for seller to bear the $100 consumed by him by way of the following entries

Debit  The seller $100

Credit  Buyer bill $100

This is in the spirit of fairness to both Buyer Bill and Seller.  

5 0
3 years ago
A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The required return on the preferred
snow_lady [41]

Answer:

$64

Explanation:

A firm has an annual dividend of $4

The required return is 16%

Therefore the value of the preferred stock can be calculated as follows

= 16/100 × 4

= 0.16 × 4

= 0.64 ×100

= $64

Hence the value of the preferred stock is $64

4 0
2 years ago
Can someone please help me
Kisachek [45]
General skills i think
8 0
3 years ago
Please help 10 good pg 13 thrillers
qaws [65]

5 thrillers that might help you:

1, The hobbit

2, Hunger games

3, Harry potter

4, Garden of the galaxy

5, Venom

3 0
3 years ago
ssume that Kish Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D 0 =
Rufina [12.5K]

Answer:

Option (D) is correct.

Explanation:

Given that,

Dividend, D0 = $0.90

Price, P0 = $27.50

Growth rate, g = 7.00% (constant)

D1 = D0 (1 + g)

    = $0.90 × (1 + 0.07)

    = $0.90 × 1.07

    = $0.963

Cost of equity, Ke = [ D1 ÷ P0 ] + g

                               = [$0.963 ÷ $27.50 ] + 0.07

                              = 0.0350 + 0.07

                               = 0.1050 i.e 10.50 %

7 0
2 years ago
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