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3 years ago

May 24 Sold merchandise on account to Old Town Cafe $18,450. The cost of goods sold was $11,000.

Business

1 answer:

zubka84 [21]3 years ago

7 0

Answer:

Date General Ledger Debit Credit

May 24 Accounts Receivable-Old Town Café $18,450

Sales $18,450

Cost of goods sold $11,000

Inventory $11,000

Sept. 30 Cash $6,000

Allowance for Doubtful Accounts $12,450

Accounts Receivable-Old Town Cafe $18,450

Dec. 7 Accounts Receivable-Old Town Cafe $12,450

Allowance for Doubtful Accounts $12,450

Cash $12,450

Accounts Receivable-Old Town Cafe $12,450

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3 years ago

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The best answer for this question would be:

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3 years ago

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Calculating present values is a useful way to compare cases where money is to be received in the future. The higher the present value (when comparing cases where you get money), the better. To calculate it, we make use of the next formula:

$PV=\frac{C}{(1+r)^{n}}$

Where PV: Present value,

C: Cash flow at a given period,

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Now, since we are getting money twice in each case (the first payment one year from today, and the final payment two years from today), we can restructure our present value formula to include these two payments. We will get something like this:

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Notice how each fraction represents one of the payments received, with one having an 'n' of 1 year, and the other one having an 'n' of 2 years. C₁ and C₂ represent the first and the second payment, respectively.

Now that we have our completed formula, let's review each contract's present value (PV) with the lowest interest rate (7%), just to see how it turns out. Remember that 7% equals 0.07 in any formula:

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So Contract B's present value at 7% interest rate would be equal to $181011.442, which exceeds that of Contract A.

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Answer:

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