Answer:
Amos Company
Statement of retained earning
as on December 31, 2017
Retained Earning December 31, 2016 $859,000
Add: Net Income for 2018 $223,000
Dividend -$29,000
Prior years error adjustment <u>-$37,600 </u>
Retained Earning December 31 <u> $1,015,400</u>
Explanation:
Retained Earning is an equity account and its balance is credit in nature. It is the accumulated balance of all the prior year's income / losses after paying all the dividend. This balance can be used for the dividend payment or reinvestment in the business.
Omission of depreciation expense understated the expenses for the year and overstated the profit of 2015, which ultimately overstated the retained earning value. we need to adjust this error in retained earning balance because it is adjustment of an prior year error, it will not be included in the current years net income calculations. It already netted off so we just simply adjust it in the retained earning with the value of $37,600.
The correct option is C. The valuation of the cost of goods sold which is recorded in its book as $5,900 and stock available for sale is $3,900 under the FIFO method.
<h3>
Why is the FIFO method used for Inventory Valuation?</h3>
FIFO will enable you to claim a higher average cost-per-piece on newer inventory, which can help you save money on taxes if your inventory costs are declining over time. Because it assumes that older products are no longer in use, FIFO does not necessitate as much documentation as LIFO.
Calculation Cost of Goods Sold (COGS) under FIFO Method:
COGS = 800 x 2 + 700 x 3 + 300 x 3 + 1300 x 1 =
COGS = $5,900
The calculation for Stock available for Sale:
Stock available for Sale = 700 x 1 + 800 x 4
Stock available for Sale = $3,900
Thus, the Cost of Goods Sold is $5,900, and the stock available for sale is $3,900 under the FIFO method.
Learn more about FIFO here:
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Answer: $22.54
Given:
Poindexter’s credit card uses the average daily balance method.
After the first 15 days of a 31-day cycle, his balance was $2110
He paid off his entire balance and didn't make any new purchases
His credit card's APR is 26%,
His average daily balance for the month can be computed as:
Day 1 – 15 $2110
Day 16 -31 %0
(Day 1 Balance + Day 2 Balance + Day 3 Balance…) / number of days in the billing cycle
($2110x15)/31
$31,650/31
$1020.97
The interest Poindexter will be charged for the billing cycle is as follows:
((.26/365)*1020.97)*31=
0.000712*1020.97
0.72 *31
$22.54
Answer:
$343,000
Explanation:
Given:
Annual income of Jim = $70,000
Amount of life insurance using Easy Method
According to the Easy Method of life insurance, a person has to take 70% of his annual income and multiply it with 7 to get a minimum amount of Life insurance for his family.
According to Easy method Jim's Life insurance amount is $343,000
Computation:
(Annual income)(70%)(7)
($70,000)(0.7)(7)
$343,000
