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lana66690 [7]
3 years ago
13

On December 1, Year 1, Jack’s Snow Removal Company received $6,000 of cash in advance from a customer and promised to provide se

rvices for that customer during the months of December, January, and February. How will the Year 1 year-end adjustment to recognize the partial expiration of the contract impact the elements of the financial statements model?
Business
1 answer:
AVprozaik [17]3 years ago
4 0

Answer:

Increase Revenue, Decrease Liability

Explanation:

On December 1, They have recognized a liability of $6,000

with the journal entry:

(DR) Cash                $6,000

(CR)   Unearned Revenue       $6,000

Now, on December 31 let's assume that the expiration is an exact

per month division of $2,000 ($6,000 / 3 months)

The adjusting entry would be:

(DR) Unearned Revenue     $2,000

(CR)      Service Revenue             $6,000

The first effect is clear, there is an Increase in Revenue since  

the company have rendered the services.

Now, the second effect is that the Liabilities have decreased

because of the debit to "Unearned Revenue" which is a liability.

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Answer: $595

Explanation:

First find the probability of a $2,000 loss.

= 1 - other probabilities

= 1 - 0.6 - 0.05 - 0.13

= 0.22

Expected cost to the publishing company is a weighted average of the costs:

= (0 * 0.60) + (500 * 0.05) + (1,000 * 0.13) + (2,000 * 0.22)

= $595

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3 years ago
14 the oligopoly model that predicts that oligopoly price tend to be very rigid is the ___
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Kinked demand

I hope that helped
4 0
3 years ago
Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types o
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Answer:

Handling materials = $6.25 per part

Inspecting product  = $600 per batch

Processing purchase  = $150 per order

Handling materials  = $350 per invoice

Insuring the factory  = $7.50 per square feet

Designing packaging  = $37,500 per model

Explanation:

Activity rate = Estimated Cost ÷ Estimated Activity

therefore,

Handling materials = $ 625,000 ÷ 100,000 parts = $6.25

Inspecting product = $ 900,000 ÷ 1,500 batches = $600

Processing purchase = $ 105,000 ÷ 700 orders = $150

Handling materials = $ 175,000 ÷ 500 invoices = $350

Insuring the factory = $ 300,000 ÷ 40,000 square feet = $7.50

Designing packaging = $ 75,000 ÷ 2 models = $37,500

6 0
3 years ago
As of January 1, 2021, Barley Co. had a credit balance of $521,000 in its allowance for uncollectible accounts. Based on experie
SSSSS [86.1K]

Answer:

The amount which is should be reported as an allowance for uncollectible accounts is $180,500

Explanation:

The amount for allowance for uncollectible accounts on December 31, 2021 is computed as:

Allowance for uncollectible = Gross Accounts Receivable × Percentage of uncollectible

where

gross accounts receivable amounts to $18,050,000

Percentage of uncollectible is 1%

Putting the values:

=  $18,050,000 × 1%

= $180,500

4 0
3 years ago
Milo Company uses the​ percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $ 150
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Answer:

Revised balance = $8000

Explanation:

Milo Company uses the​ percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $ 150 comma 000​, and management estimates 4​% will be uncollectible.

Milo ​Company's balance of Allowance for Uncollectible Accounts after​ adjustments, was $ 5 comma 000.

The following​ year, Milo Company wrote off $ 3 comma 000 of old receivables as uncollectible.

The Allowance account​ balance now will be:

Amount of Uncollectible Accounts for the year = 4% x $150,000 = $6000

Previous balance is $5,000 less amount written off $3000 = $2000

Revised balance = $6,000 + $2000 which is $8000

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3 years ago
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