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Answer:
Journal entry
Explanation:
Before passing the journal entry we need to do the following calculations
Uncollected amount is
= $4,400 × 50%
= $2,200
Uncollected amount is
= ($4,400 - $2,200) × 0.03
= $2,200 × 0.03
= $66
So, the total amount is
= $2,200 + $66
= $2,266
Now the journal entry is
Bad debt expense $2,266
To Allowance for uncollectible accounts $2,266
(Being the uncollectible account is recorded)
Answer:
Replication
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Answer:
The initial margin is $5,950
Explanation:
To calculate for the initial margin, we have to decide from two options. After making the calculations, the initial margin would be the one with a greater outcome.
Given:
Option price = $3.50
Strike price = $60
Stock price = $57
Stock price - Strike price = $60- $57 = $3
Option 1:
Option 2:
Since we got $5,950 in our first calculation, we will take that as our initial margin as it is greater than the second option. It can be provided in part with initial sum of $500 * 3 = $1,750
Answer: Interest expense = $45500
Cash outflow = $45500
Explanation:
Based on the information that were given in the question, the amounts of interest expense and cash flows from operating activities, that will be reported in the financial statements for the year ending December 31, Year 1 will be calculated thus:
Interest expense = $700,000 × 6.50%
= $700,000 × 0.065
= $45500
The interest expense of $45500 will be reported on December 31, Year 1 in the income statement and will also be reported in the cash outflow as well. Therefore,
Interest expense = $45500
Cash outflow = $45500
