Answer:
The Journal entries are as follows:
(i) On March 1,
Prepaid insurance A/c Dr. $24,600
To cash A/c $24,600
(To record the purchase of insurance in advance)
(ii) On December 31,
Insurance expense A/c Dr. $20,500
To Prepaid insurance $20,500
(To record the insurance expense)
Workings:
Insurance expense:
= $2,050 × 10 months (From March 1 to December 31)
= $20,500
When the current output is more than the potential output the fed is likely to enact decreasing reserves to increase interest rates.
The reason why they would have to do this is based on the fact that when the actual output in the economy is more than the potential output, It means that there is an inflationary gap.
In order to close this gap, the fed would have to reduce the aggregate demand, thereby raising the rate of interest. This would in turn lead to the fall in consumption and fall in saving.
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Answer:
Profit concept explanation, with example of a coaching institute.
Explanation:
The business considered is of a coaching institute.
Its revenue is the fee earned by students studying in the institute.
The cost is fixed cost of set up, variable cost on electricity, mantainence & other miscellaneous expenses.
Profit = Total Fee received from all the students - Total cost of fixed & variable factors.
Eg : Fee per student = 1000, 10 students. Fixed cost = 2000, Variable cost = 1000
Profit = 1000 (10) - 2000 - 1000
= 10000 - 3000 = 7000
Answer:
Journal Entry
Dr. Allowance for doubtful accounts $5,880
Cr. Account Receivable $5,880
Explanation:
When a receivable of the business is considered to be non-collectible from a customer, it is written off from the accounts. This event will decrease the account receivable balance and allowance for the doubtful accounts too. a Debit entry in the Allowance for doubtful account and a credit entry in accounts receivable is made to incorporate the effect of this transaction.
