Answer:
Rent expense (Dr,) $9,800
Prepaid Rent $9,800
Explanation:
The accrual concept of accounting requires us to record the expenses in a period in which they are incurred rather than when cash is paid. When the company paid advance rent of six months at the end of October, it will record a current asset (Unexpired resource) on the face of balance sheet. At the end each accounting period, it is required to expense out the resources (benefits) that are expired (utilized). This can be done through straight-line method. So, on December 31, 2019, the rent expense of two months that is of November and December should be charged to profit and loss statement in-order to record the expense of related period.
<u>Workings</u>
Rent expense per month = 29,400 / 6 = $4,900.
⇒ Rent expense of two months = 4,900 * 2 = $9,800.
This amount should be written off and the required adjusting entry is:
Rent expense (Dr,) $9,800
Prepaid Rent $9,800
Answer:
$29.71
Explanation:
Value of Stock can be determine by Dividend Valuation method.
Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is determined by calculating present value of future dividend payment.
In this question the Dividend payment is $2, growth rate is 4% and required rate of return is 11%.
Formula for Valuation:
Value of Share = Dividend (1 + g) / (Rate of return - Growth rate)
Value of Share = $2.00 (1 + 4%) / (11% - 4%)
Value of Share = $2.00 (1.04) / 7%
Value of Share = $29.71
Answer: Increase the treasury stock account and decrease the cash account by $36,000.
Explanation:
The journal entries that would be used to record the purchase of treasury stock will be to increase the treasury stock account and decrease the cash account by $36,000.
Note that the $36000 was calculated as:
= 1,000 shares × $36 per share
= $36,000
Answer:
Option "C"is the correct answer to the following statement.
Explanation:
The retrospective method effect requires the development of new accounting procedures. In other terms, the retrospective method would affect the reporting of past time financial statements.
In this situation, the company will use the equity method at the place of the Fair-value method for calculating and control over their investment, so the above option is correct.
Answer:
18.80%
Explanation:
Data given
Risk free rate = 4%
Beta = 1.85
Market return = 12%
The computation of rate of return is shown below:-
Using CAPM
Rate of Return = Risk free rate + Beta × (Market return- Risk free rate)
= 4% + 1.85 × (12% - 4%)
= 4% + 1.85 × 8%
= 4% + 14.8%
= 18.80%
Therefore for computing the rate of return we simply applied the above formula.
