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Ierofanga [76]
2 years ago
15

Lani Co. uses the allowance method to account for bad debts. At the end of the year, their unadjusted trial balance shows an acc

ounts receivable balance of $400,000; allowance for doubtful accounts balance of $400 (debit); and sales of $1,200,000. Based on history, Lani estimates that bad debts will be 1% of accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of:
A. $3,600
B. $4,000
C. $11,600
D. $12,400
E. $12,000
F. $4,400
Business
1 answer:
Vlada [557]2 years ago
3 0

Answer:

D. $12,400

Explanation:

Use the following formula to calculate the Bad debt expense for the period

Bad debt expesne = Debit balance of Allowance account + Allowance for the period

Where

Debit balance of Allowance account = $400

Allowance for the period = Account receivables x percentage of allowance = $1,200,000 x 1% = $12,000

Placing values in the formula

Bad debt expesne = $400 + $12,000

Bad debt expesne = $12,400

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Answer:

B. "Carefully consider the entry choices over time before making a decision."

Explanation:

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Answer:

The correct answer is letter "D": $24.

Explanation:

Opportunity cost can be defined as the cost of the best next available option after taking another decision in regards to a situation. It is also the return that the chosen option provides compared to the return that could have provided the option that was forgone.

In this case, choosing to go to the local carnival will represent losing one hour of working as a coach assistant ($15). Besides, as there is a $9 admission fee to the carnival, you will need to spend that money. Thus, the total opportunity cost of going to the carnival instead of working is $24 (<em>$15+$9=$24</em>).

6 0
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Last year's asset turnover ratio was 2.0. Sales have increased by 25% and total assets have increased by 10% since that time. Wh
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Answer: d. 2.27

Explanation:

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Last years turnover ratio was 2.0 so assume Sales were $20 and Assets were $10 which would give the turnover of 2.0

The new turnover would be;

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Which type of business ownership represents a hybrid between a partnership and corporation by allowing up to 100 shareholders wi
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