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skad [1K]
3 years ago
14

Melton Company sold some machinery to Addison Company on January 1, 2014. The cash selling price would have been $947,700. Addis

on entered into an installment sales contract which required annual payments of $250,000, including interest at 10%, over five years. The first payment was due on December 31, 2014. What amount of interest income should be included in Melton's 2015 income statement (the second year of the contract)
Business
1 answer:
GREYUIT [131]3 years ago
3 0

Answer:

$79,247

Explanation:

Installment includes the interest and principal as well to be paid on equal proportion. It need to be separated to report in the financial statement. Installment amortization is used to calculate the principal portion and interest portion of each years installment.

Installment Sale Schedule

Year    Balance      Payment     Principal    Interest  

1         $947,700   $250,000   $155,230   $94,770 ( 947,700 x 10% )

2        $792,470   $250,000   $170,753   $79,247 ( 792,470 x 10% )

Interest of $79,247 should be included in  Melton's 2015 income statement.

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A country's export ratio is Group of answer choices The ratio of imports to GDP. The ratio of imports to exports. The ratio of t
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2 years ago
A company had revenues of $54,000 and expenses of $43,250 for the accounting period. The company paid $5,950 cash in dividends t
ratelena [41]

Answer:B. Debit Income Summary $54,000; credit Revenues $54,000.

Explanation:

The following entries can be a closing entry

a)To record closing entry of revenue account

Account                                                    Debit                          Credit

Revenues                                              $54,000

Income summary                                                                      $54,000

b)To record closing entry of expense account

Income summary                                  $43,250

Expenses                                                                                       $43,250

c)To record closing entry of income summary account

Income summary ( $54,000- $43,250)   $10,750

Retained earnings                                                                           $10,750

d) to record the closing entry of dividends account

Retained Earnings                                        $5,950

Dividend                                                                                               $5,950

The entry that  could not be a closing entry is B. Debit Income Summary $54,000; credit Revenues $54,000 because income summary account should be credited with the revenue amount of $54,000 as Revenue increases the  income of every business.

 

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MrMuchimi

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