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rodikova [14]
2 years ago
12

At the end of 2003, Ritzcar Co. fails to accrue sales commissions earned during 2003, but paid in 2004. The error is not repeate

d in 2004. What was the effect of this error on 2003 ending working capital and on the 2004 ending retained earnings balance
Business
1 answer:
Mandarinka [93]2 years ago
4 0

Answer:

The effect of this error on 2003 ending working capital is that it overstated the ending 2003 working capital.

The error does not have effect on the 2004 ending retained earnings balance.

Explanation:

Let the amount of the commission expense be xxxx.

At the end of 2003, the journal entries should have been as follows:

Debit Commission expense for xxxx

Credie Commission payable for xxxx

Also, we have:

Working capital = Current assets – Current liabilities ………… (1)

From equation (1), current liabilities are understated because commission payable which was not recorded is an item under current liabilities. Since the current liabilities are understated, that indicates that the working capital in equation is overstated. Therefore, the effect of this error on 2003 ending working capital is that it overstated the ending 2003 working capital.

When the 2003 commission expense in the entries above was paid in 2004, it would have been recognized as an expense. This made the error to counterbalance. This implies that the 2004 ending retained earnings balance is still correct despite that there are errors in the earnings of the two years. Therefore, the error does not have effect on the 2004 ending retained earnings balance.

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Sales $ 2,000,000 100 % $ 500,000 100 % $ 2,500,000 100 % Variable expenses 800,000 40 % 250,000 50 % 1,050,000 42 % Contributio
Sonja [21]

Answer:

$1.5 million

Explanation:

The computation of break even sales in dollars is shown below:

= (Fixed expenses) ÷ (profit volume ratio)

where,  

Contribution margin  = Sales  - Variable expense

= $2,500,000 - 1,050,000

= $1,450,000

And, Profit volume ratio = (Contribution) ÷ (sales) × 100

So, the Profit volume ratio = ($1,450,000) ÷ ( $2,500,000) × 100 = 58%

And, the fixed expenses is $870,000  

Now put these values to the above formula  

So, the value would equal to  

= ($870,000) ÷ (58%)  

= $1.5 million

3 0
3 years ago
Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May June Manu
faust18 [17]

Answer:

$187,975

Explanation:

Calculation to determine The cash payments expected for Finch Company in the month of April

Cash Payment= 3/4 *$198,500 (May's manufacturing cost)+1/4 *$156,400 (April's manufacturing cost received in May)

Cash Payment=$148,875+$39,100

Cash Payment=$187,975

The The cash payments expected for Finch Company in the month of April are $187,975

6 0
2 years ago
Jason is shopping at Hollister. Hollister has a sale: spend $100 saves 10%. If Jason buys clothes that costs $100, how much will
densk [106]

Answer:

$90

Explanation:

Hollister has an offer of 10%  savings for every purchase.

Jason buys clothes for $100. His savings will be 10% of $100

=10/100 x100

=0.1 x 100

=$10

Jason will pay

=$100 - $10

=$90

Jason will pay $90

8 0
3 years ago
Comparing ABC and Plantwide overhead Cost Assignments Wellington Chocolate Company uses activity-based costing (ABC). The contro
asambeis [7]

Answer:

$432,000 Setting up equipment ⇒ based on setup hours

$1,440,000 Other overhead ⇒ based on oven hours

product                units produced            setup hours          oven hours

Fudge                         8,000                         6,400                    1,600

Cookies                  445,000                         1,600                    8,000

1) Activity rate:

  • a) setup hours = total setup costs / total setup hours = $432,000 / 8,000 hours = $54 per setup hour
  • b) oven hours = total other overhead costs / total oven hours = $1,440,000 / 9,600 hours = $150 per oven hour

2) total overhead assigned to fudge = (6,400 setup hours x $54 per setup hour) + (1,600 oven hours x $150 per oven hour) = $345,600 + $240,000 = $585,600

5 0
3 years ago
How many years are required for an investment to double in value if it is appreciating at the rate of 9​% compounded​ continuous
Vesna [10]

Answer:

time required is 7.70 years

Explanation:

given data

interest rate = 9%

solution

we know with the compounded​ continuously rate r and time t amount is

A(t) = A(o) e^{rt}     .................1

and we have given amount is double so

A(t) = 2 A(o)

so from equation 1 put the value and we get here

2 A(o) = A(o) e^{rt}

ln(2) = 0.09 t

solve it we get time

time t = 7.70 years

so time required is 7.70 years

7 0
3 years ago
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