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3 years ago

How does an increase in bad debt affect a sole trader financial statement

Business

1 answer:

Kamila [148]3 years ago

7 0

Answer:

It will increase expense, thereby reducing the profit mentioned in the income statement and decrease the current asset (debtor) recorded in the balance sheet.

Explanation:

Bad Debt is an expense that is recorded when it is expected that the customer, who owes a debt to the business, might default in clearing their dues.

As such when the bad debt amount is increased it will result in a rise in expense and therefore the profit, as stated in the profit and loss (income statement) of the sole trader would decrease.

Moreover, it will also decrease the value of trade receivables (current assets) mentioned in the balance sheet. The following entry would be recorded:

Bad Debts (Dr) xxxxx

Trade Receivables (Cr) xxxxxx

Hence, the expenses will increase while the current asset will decrease.

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Suppose you invest 60% of your portfolio in campbell soup and 40% in boeing. the expected dollar return on your campbell soup st

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3 years ago

A buyer submits an offer to purchase to the listing agent. He finds out that more than several offers are coming in for the same

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A buyer submits an offer to purchase to the listing agent. He finds out that more than several offers are coming in for the same property. He can expect that all offers will probably be presented at the same time, and the seller will select among them.

Explanation:

In certain situations buyers have to consider multiple rival purchase deals. Sellers will deal with different deals in several ways.

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3 years ago

Orange Inc., an orange juice producer with a current debt-to-equity ratio of 2, is considering expanding its operations to produ

postnew [5]

Answer:

8.25%

Explanation:

Orange, Inc. should calculate the MARR (minimum acceptable rate of return) for this project using the following:

Re = 12% (similar to Paste, Inc., so it can be considered the industry's average)

Rd = 6% x (1 - 25%) = 4.5%

MARR = (1/2 x 12%) + (1/2 x 4.5%) = 6% + 2.25% = 8.25%

This calculation is similar to calculating a company's WACC since you must determine the weighted cost of financing the project.

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3 years ago

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Rajiv loves watching Downton Abbey on his local public TV station, but he never sends any money to support the station during it

daser333 [38]

Answer:

free rider

true

Explanation:

The free rider problem is a form of market failure. It occurs when people benefit from a good or service of communal nature and do not pay to enjoy these services.

Downtown abbey can be classified as a public good, if it is made a private good, the problem would be solved

A public good is a good that is non excludable and non rivalrous.

A private good is a good that is excludable and rivalrous. They are usually exchanged in the market by private sector businesses. It

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