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zavuch27 [327]
3 years ago
11

During its first year of operations, Mack's Plumbing Supply Co. had sales of $550,000, wrote off $8,800 of accounts as uncollect

ible using the direct write-off method, and reported net income of $60,500. Determine what the net income would have been if the allowance method had been used, and the company estimated that 2.5% of sales would be uncollectible.
Business
1 answer:
vova2212 [387]3 years ago
3 0

Answer:

$60,500

Explanation:

With regards to the above, the write off does not affect the realizable value of accounts receivables. Also, the total asset or net income is not affected by the write off or specific account. Instead, both assets and net income are affected in the period when bad debt expense is predicted and then recorded with an adjusting entry.

Accounts receivables

$550,000

Less:

Allowance for doubtful account

($550,00 × 2.5%)

($13,750)

Estimated realizable accounts receivables

$536,250

If the amount of bad debt decreases or increases as given below, then the income is also increased or decreased by the amount given.

Bad debts = $13,750

Uncollectible previously written off = $8,800

Difference

$4,950

Net income

$60,500

Less:

Difference

($4,950)

Reported income

$55,550

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myrzilka [38]

Answer:

A

Explanation:

7 0
3 years ago
National Orthopedics Co. issued 8% bonds, dated January 1, with a face amount of $550,000 on January 1, 2021. The bonds mature o
loris [4]

Answer:

1) the price of each bond:

PV of face value = $1,000 / 1.05⁸ = $676.84

PV of coupon payments = $40 x 6.4632 (PV annuity factor, 5%, 8 periods) = $258.53

market price per coupon = $935.37

2) journal entry to record issuance of the bonds:

January 1, 2021, bonds issued at a discount

Dr Cash 514,453.50

Dr Discount on bonds payable 35,546.50

    Cr Bonds payable 550,000

3) I used an excel spreadsheet    

4) June 30, 2021, first coupon payment

Dr Interest expense 25,722.68

    Cr Cash 22,000

    Cr Discount on bonds payable 3,722.68

5) December 31, 2024, last coupon payment

Dr Interest expense 27,236.45

    Cr Cash 22,000

    Cr Discount on bonds payable 5,236.45

December 31, 2024, bonds are redeemed

Dr Bonds payable 550,000

    Cr Cash 550,000

Download pdf
4 0
3 years ago
Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In
kogti [31]

Answer:

The amount of gain that Red Blossom recognize in the exchange is $322500 and its basis in the land it receives is $635000.

Explanation:

Red Blossom recognize the gain

= Fair market value of land – corporation basis

= $635000 - $312500

= $322500

Basis of Land = Fair market value  

                       = $635000

$322500 gain recognized and a basis in the land of $635000

Therefore, The amount of gain that Red Blossom recognize in the exchange is $322500 and its basis in the land it receives is $635000.

8 0
3 years ago
Suppose Russia and Sweden each produce only paper and cars. Russia can produce 8 tons of paper or 4 million cars each year. Swed
azamat

Answer:

Attached grap with point A and B.

Explanation:

Russia will produce the cars as their production has te lower opportunity cost:

(Note: Opportunity cost is the amount of production resigned for the current output)

<u>Sweden pportunity cost for production car: </u>

25 ton of papper / 5 m cars = 5 tons per millon of cars

<u>Russia pportunity cost for production car: </u>

8 ton of papper / 4 m cars = 2 tons per millon of cars

With the trade set at 2 millon car for 6 tons of paper we get the following

Sweden produce 25 tons - 6 traded = 19

and receive 2 millon car

Russia produce 4 millon car - 2 traded = 2

and receive 6 tons of pappers

8 0
3 years ago
Assume the audience for Who Wants to Be a Millionaire on a local cable channel is 115,000. During the months of January and Febr
Lapatulllka [165]

Answer:

Gross Impressions

Explanation:

Gross impressions represent the total number of households or individuals that is represented by a given media schedule. It is the impression that an advertisement gets. It is the total sum of audiences that is individuals or households that is exposed to the same commercial or program on multiple occasions. It is different to gross rating points. The latter deals with the number of impressions while the former deals with the number of audiences.

In this case, gross impressions

= Audience × number of ads

= 115000 × 16

= 1840000

4 0
3 years ago
Read 2 more answers
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