Difference between profit and loss

What are the accounting differences between cash and receivables from the perspective of a buyer? A seller? How are these differ

bogdanovich [222]

Answer:

From a buyer's perspective, a sale made on credit represents a liability. While a sale made on cash represents a decrease of current assets.

From a seller's perspective, a sale made on credit or cash increases current assets, but the possibility of a bad debt always exist, therefore, accounts receivables must be periodically adjusted due to bad debts.

If the seller or buyer uses accrual accounting system, the previous description holds, but if they use cash basis accounting, things change a lot. When use cash basis, transactions are recorded only when cash is exchanged, so accounts receivables do not actually increase assets (seller's perspective), and accounts payables do not increase liabilities (buyer's perspective).

6 0

2 years ago

On July 1, 2018, Crane Company issued for $9450000 a total of 90000 shares of $100 par value, 8% noncumulative preferred stock a

RSB [31]

Answer:

Cash 540,000

Paid-in Capital—Stock Warrants $86,400

Common Stock $360,000

Paid-in Capital in Excess of Par—Common Stock 273,600

Explanation:

The Key to this Question is:

Although the right to purchase the common stock was exercised October 31, 2018. Since the warrant has already been issued July 1, 2018, the 36,000 rights exercised will be calculated and valuated based on prevailing prices on July 1, 2018.

Hence, the Par Value = $10, the purchase price allowed by warrant = $15 and the Market price of the rights to use $2.40

Step 1: Calculate the Cash Amount Received from the exercise of the 36,000 rights

= 36,000 Shares (exercised on October 31, 2018) x $15 ( the Warrant right to purchase common Stock)

= 36,000 x $15

=$540,000 (this is the amount paid for the 36,000 rights exercised)

Step 2: Calculate the Paid in Capital

a. Paid in Capital- Stock Warrants- based on the Market Price of Rights on July 1, 2018

= 36,000 x $2.40 (Market Price of the rights on July 1, 2018)

= $86,400 (This is the value of the 36,000 shares purchased based on the prevailing market price @ July 1, 2018)

b. Calculate Paid in Capital based on the Issued warrant's Par value of One Share of Common Stock when the warrant was issued

= 36, 000 x $10

= $360,000

c. Calculate the Paid-in Capital in Excess of Par—Common Stock

= $360,000 - $86,000

=$273,600 (This is the difference between the par value on July 1, 2018 when the rights were issued and the market price of the rights on that same date).

In summary:

Cash 540,000

Paid-in Capital—Stock Warrants $86,400

Common Stock $360,000

Paid-in Capital in Excess of Par—Common Stock 273,600

5 0

3 years ago

A customer buys 100 shares of DEFF stock at $150 per share. During the first year of owning the stock, the customer receives $45

Vlad [161]

Answer:

The total return on investment for the holding period is 10.5%.

Explanation:

If the consumer bought 100 shares for a value of $ 150, obtaining after a year $ 450 total for dividends and seeing his shares go to a value of $ 161.25, to obtain the total return on investment we must perform the following calculations:

On the one hand, we have a return of $ 450 in dividends, which were paid by the total set of 100 shares, with which each share paid $ 4.50 in that concept.

In addition, we have the increase in the value of the shares, which went from $ 150 to $ 161.25, that is, an increase of $ 11.25 per share, which multiplied by the total of 100 shares gives a total sum of $ 1,125.

Thus, adding the dividends to the improvement in the value of the shares, we have a total profit of $ 1,575. Now, to determine the percentage of return that said sum represents, we must perform a cross multiplication:

15,000 = 100

1,575 = X

(1,575 x 100) / 15,000 = X

10.5 = X

So, the rate of return on this investment is 10.5% of the starting value.

4 0

3 years ago

A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) $90,000 Production

umka21 [38]

Answer:

d.$18,900

Explanation:

Gross Profit is the net of Sales value and production cost in the period for the units sold. Under absorption costing all the direct and indirect costs incurred in the production of products are included in the total production cost. As the cost is available for 100 units produced we need to calculate the cost of 90 unit and deduct this cost from the sales value to determine the gross profit and then deduct the operating expenses to calculate the operating income.

Sales (90 units) $90,000

Less: Production costs:

Direct materials ( $40,000 x 90/100 ) $36,000

Direct labor ( 20,000 x 90/100 ) $18,000

Variable factory overhead ( 2,000 x 90/100 ) $1,800

Fixed factory overhead ( 7,000 x 90/100 ) $6,300

Total Production cost ($62,100)

Gross Profit $27,900

Less Operating expenses:

Variable operating expenses $8,000

Fixed operating expenses $1,000

($9,000)

Operating Income $18,900

6 0

3 years ago

Give examples of how we do not recognize people as having these rights but make them conditional on success in the marketplace.

Helen [10]

Answer:

Thomas Edison

Explanation:

Thomas Edison early life was very normal. He was born in a poor family. His mother was a school teacher. Thomas Edison did not get recognition until he was successful in inventing the bulb. He did many experiment which failed and no one supported him during this era. He continued his hard work and finally his one of experiment became successful and he invented a bulb. The world then recognized his efforts and made him a hero. His recognition was only based on the success of his experiment and the marketplace.

3 0

2 years ago