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Angelina_Jolie [31]
3 years ago
8

Judd, Inc., owns 35% of Cosby Corporation. During the calendar year 2010, Cosby had net earnings of $300,000 and paid dividends

of $30,000. Judd mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. What effect would this have on the investment account, net income, and retained earnings, respectively?
a. Understate, overstate, overstate
b. Overstate, understate, understate
c. Overstate, overstate, overstate
d. Understate, understate, understate
Business
1 answer:
zalisa [80]3 years ago
5 0

Answer: d. Understate, understate, understate

Explanation:

If using fair value, the effects of net earnings and dividends would not be accounted for. With the equity method however, this would have done leading to the investment account, net income, and retained earnings being understated if using fair value as opposed to equity.

The Equity method would have sent 35% of the net earnings to the investment account which would have increased it. 35% of the Cosby dividends would have been sent to the net income which would have increased it as well and when net income increases, so does retained earnings.

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The percentage of decrease in the average price of the economy’s goods and services is known as the __________.
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Deflation (where the average prices are positive, but falling) OR Disinflation where they are negative
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On september 1, capitol maintenance company contracted to provide monthly maintenance services for the next nine months at a rat
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U<span>pon receiving the $21,600 payment of the client, Capitol should recognize a deferred revenue. Deferred revenue </span>is<span> the receipt of compensation when the services are</span> <span>not yet rendered. </span>Since they<span> started on September 1, </span><span>they </span>have rendered four months of service to the client until December 31. The rate of their services is $2,400 per month. Therefore, they have earned $9,600 for the current year. This is the adjusting entry to recognize revenue for the year: 

Deferred Revenue                          9,600

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3 0
3 years ago
Use the following scenario and data for all questions During lunch time, customers arrive at a postal office at a rate of per ho
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Answer:

Check the explanation

Explanation:

The assumptions in single-server queue theory include: -

  1.    Unlimited calling population may enter the queue
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  3.    Single waiting line and arriving customers are patient customers who can wait in the queue before they can be served regardless of the length of the line.
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Kindly check the attached images below to see the step by step explanation to the question above

8 0
3 years ago
On January 1, 2012, Fei Corp. issued a 3-year, 5% coupon, $100,000 face value bond. The bond was priced at an effective interest
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c. $7,418

Explanation:

Calculation to determine What was Fei’s Interest Expense on the bond during fiscal year 2012

Using this formula

Interest Expense =Interest payable+Amortization of bonds discount interest expense

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Interest Expense=$5,000+$2,418

Interest Expense=$7,418

Therefore Fei’s Interest Expense on the bond during fiscal year 2012 is $7,418

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Information on quarterly returns is usually material so we can expect it to be material here as well which means that the supervisor is engaged in insider trading.

Insider trading is not only unethical but also highly illegal. Reporting your supervisor can get them sent to jail.

8 0
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