Answer:
1. realizable value = accounts receivable - allowance for doubtful accounts = $45,700 - $3,000 = $42,700
2. the journal entry used to write off the account is:
Dr Allowance for doubtful accounts 420
Cr Accounts receivable 420
Since both accounts receivable and the allowance account are decreased in the same amount, the net realizable value doesn't change (still is $42,700).
Answer:
The correct answer that fills the gaps are: A. increase; E. decreasing.
Explanation:
The Law of diminishing returns has a fundamental role in the productivity of a factor, since it indicates that the marginal productivity of each factor decreases as more units of it are added to the production process (leaving the rest of the productive factors in a constant amount). In this way exceeding the optimum amount of a productive factor can even result in a decrease in total productivity.
It is necessary to explain the basic concept of diminishing marginal returns. If we increase the quantity of a productive factor and leave the amount used of the rest fixed, there will come a time when the quantity of final product we obtain is less as we produce more and more. There may even come a time when, by increasing a unit of factor employed (for example, work or machinery), production decreases.
Explained in simple words, it seems that despite what may be thought a priori, increasing a factor not only does not increase the production of the good or service but can lead to a gradual decrease in the amount produced.
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NOTE: If you need to extend the explanation given, you can make a comment or add a new question. I will be very pleased to help you.
Answer:
Part 2 Which of the following transactions does not involve an accrual?
- Recording the pre-payment of two years' worth of insurance. THIS IS AN ASSET EXCHANGE TRANSACTION SINCE IT CREATES AN ASSET ACCOUNT, PREPAID INSURANCE, THAT DECREASES AS TIME PASSES
Part 3 The recognition of an expense may be accompanied by which of the following?
- An increase in liabilities. EXPENSES ARE NOT ALWAYS PAID IMMEDIATELY, FOR EXAMPLE UTILITIES, THEY FORM A SHORT TERM LIABILITY UNTIL PAID.
Part 4 The adjusting entry to recognize work completed on unearned revenue involves which of the following?
- A decrease in liabilities and an increase in equity. UNEARNED REVENUE IS A LIABILITY ACCOUNT, AND AS THE WORK IS COMPLETED, REVENUE SHOULD INCREASE, THEREFORE EQUITY WILL INCREASE.
Part 5 Which of the following would cause net income on the accrual basis to be different from (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?
- Paid advertising expense. IF THE COMPANY PAID ADVERTISING EXPENSES ON ACCOUNT.
Explanation:
<span>Gerald's skill is called conceptual skill. Gerald's skill would be considered conceptual skill because he is able to think clearly about abstract ideas and also relate different conceptual topics together.</span>
Answer:
The state tax Patrick must pay on the initial profit is $350. The federal tax he must pay on the initial profit is $1750. The inflation on the amount remaining after taxes is $147. As a result, the real value of Patrick’s profit is $4678
Explanation:
Patrick has successfully invested in a growing tech company. Three years ago he invested $10,000 in the company through a broker. Now he has decided to sell his stock. The value of his stock is now at $17,000. Here are the taxes and fees associated with his investment: Annual brokerage fee: $25 State tax: 5% of profit Federal tax: 25% of profit Inflation rate: 1% per year The state tax Patrick must pay on the initial profit is . The federal tax he must pay on the initial profit is . The inflation on the amount remaining after taxes is . As a result, the real value of Patrick’s profit is .
Answer:
Patrick invested $10000 and after three years the value of his stock is $17000.
Profit = Value of stock - Amount invested = $17000 - $10000 = $7000
Total brokerage fee = Annual brokerage fee × number of years = $25 × 3 = $75
State tax = 5% of profit = 5% of $7000 = 0.05 × $7000 = $350
Federal tax = 25% of profit = 25% of $7000 = 0.25 × $7000 = $1750
Profit after tax = $7000 - $350 - $1750 = $4900
Inflation on the amount remaining after taxes = 1% of profit after tax × number of years = 3 years × (0.01 × $4900) = 3 × $49 = $147
Therefore the real value of profit = Profit - Total brokerage fee - state tax - federal tax - inflation = $7000 - $75 - $350 - $1750 - $147 = $4678
