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Dominik [7]
3 years ago
11

Scott Bennett is preparing his balance sheet and income and expense statement for the year ending June 30, 2016. He is having di

fficulty classifying six items and asks for your help. Which, if any, of the following transactions are assets, liabilities, income, or expense items?
a. Scott rents a house for $1,350 a month.
b. On June 21, 2016, Scott bought diamond earrings for his wife and charged them using his MasterCard. The earrings cost $900, but he hasn’t yet received the bill.
c. Scott borrowed $3,500 from his parents last fall, but so far, he has made no payments to them.
d. Scott makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500.
e. Scott paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn’t yet received.
f. Scott invested $2,300 in some common stock.
Business
1 answer:
dybincka [34]3 years ago
5 0

Answer:

a. Expense

b. Expense and Liability

c. Assets and Liability

d. Expense and Liability

e. Expense and Asset

f. Assets

Explanation:

Assets are resources held or controlled by the entity as a results of a past event, for which future economic benefits are expected to flow to the entity, liabilities are present obligations of an entity as a result of a past event for which future economic benefits would flow out of the entity. Income and expense are elements of the income statements while the assets and liabilities are elements of balance sheet along with equities. Considering the lines

a. Scott rents a house for $1,350 a month - This is an expense except for when paid for in advance then it becomes an asset.

b. On June 21, 2016, Scott bought diamond earrings for his wife and charged them using his MasterCard. The earrings cost $900, but he hasn’t yet received the bill. - This represents both expense and a liability as he is yet to receive the bill.

c. Scott borrowed $3,500 from his parents last fall, but so far, he has made no payments to them. - This is an asset (cash) and a liability since he is yet to pay.

d. Scott makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500 -  The interest element is an expense while the amount left is a liability

e. Scott paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn’t yet received. - The  amount paid in taxes is an expense while the amount to be received back is an asset

f. Scott invested $2,300 in some common stock  - This is an assets

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PV = A*[1-(1+r)^-n]/r

A = annual payment = $100,000
r = Interest rate = 8% = 0.08
n = Number of year = 20
PV = present value of the earnings

Therefore,
PV = 100,000*[1-(1+0.08)^-20]/0.08 = $981,814.74
4 0
3 years ago
A monopolistic seller of sports cars has traced out the following demand curve: 10 customers have willingness to pay (WTP) of $1
Romashka [77]

Answer:

The answer is: 1) II > I > III

Explanation:

<u>Pricing scheme I: $2 million profit</u>

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  • Contribution margin = $150,000 - $50,000 = $100,000
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<u>Pricing scheme II: 2.25 million profit</u>

  • Price $200,000
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  • 25 units sold x $150,000 = $3.75 million
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<u>Pricing scheme III: $1.5 million profit</u>

  • Price $250,000
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  • 15 units sold x $200,000 = $3 million
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3 years ago
The Quaint Quilt produces and sells handmade quilts. Variable manufacturing costs total $140 per quilt. Fixed manufacturing over
alexgriva [62]

The total variable cost reported on Quaint Quilt's variable costing income statement is: $124,020

Calculation to determine the total variable costing income statement

Using this formula

Variable costing income statement=(Variable manufacturing costs+Variable selling and administrative costs )×Sales

Let plug in the formula

Variable costing income statement($140 + $19) x 780 quilts sold

Variable costing income statement=$159×780 quilts sold

Variable costing income statement=$124,020

Inconclusion The total variable cost reported on Quaint Quilt's variable costing income statement is: $124,020.

Learn more here:

brainly.com/question/13214374

4 0
2 years ago
The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed long-term debt of $1.87 million, and the 2018 balance sheet showed
bezimeni [28]

Answer:

Cash flow to creditors in 2018 is −$85,000

Explanation:

2017 balance sheet of Kerber’s Tennis Shop, Inc is recorded as

Interest paid............................................................................$255,000

Less:

long-term debt in 2018.........................................................$2.21 million

Less: long-term debt brought forward from 2017..........$1.87 million

Total (taken as net new borrowing)...................................$340,000

Cash flow to creditors = 2018 Interest expense less net new borrowing

= $255,000 - $340,000

= −$85,000

8 0
3 years ago
Read 2 more answers
Fama’s Llamas has a WACC of 9.7 percent. The company’s cost of equity is 12 percent, and its pretax cost of debt is 7.5 percent.
Bezzdna [24]

Answer:

0.4766

Explanation:

Given:

WACC = 9.7%

Company’s cost of equity = 12%

Pretax cost of debt = 7.5%

Tax rate = 35%

Now,

WACC

=  Weight × Cost of equity + (1 - weight) × Pretax cost of debt × (1-tax rate)

or

0.097 = weight × 0.12 + ( 1 - weight ) × 0.075 × (1 - 0.35)

or

0.097 = 0.12 × weight + 0.04875 - 0.04875 × weight

or

0.04825 = 0.07125 × weight

or

weight = 0.6772

also,

weight = \frac{\textup{Equity}}{\textup{Debt + Equity}}

or

\frac{\textup{1}}{\textup{weight}}  = \frac{\textup{Debt+equity}}{\textup{Equity}}

or

\frac{1}{0.6772} = \frac{\textup{Debt}}{\textup{Equity}}  + 1

or

1.4766 = \frac{\textup{Debt}}{\textup{Equity}}  + 1

or

\frac{\textup{Debt}}{\textup{Equity}}  = 0.4766

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