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3 years ago

Under the allowance method, Bad Debt Expense is recorded

1 answer:

3 0

The correct option is A.
Under the allowance method, bad debt expense is recorded FOR AN AMOUNT WHICH THE COMPANY ESTIMATES IT WILL NOT COLLECT.
Allowance method is a method of accounting that is used to estimate the amount of uncollectibles at the end of each financial period. Uncollectibles refers to debts which the company has no hope of ever collecting them again.

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Dee Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows$4,000from her bro

levacccp [35]

Answer:

A. The stock is purchased for $40 x 300 shares = $12,000.

Given that the amount borrowed from the broker is $4,000, Dee's margin is the initial purchase price net borrowing: $12,000 - $4,000 = $8,000.

B. If the share price falls to $30, then the value of the stock falls to $9,000. By the end of the year, the amount of the loan owed to the broker grows to:

Principal x (1 + Interest rate) = $4,000 x (1 + 0.08) = $4,320.

The value of the stock falls to: $30 x 300 shares = $9,000.

The remaining margin in the investor's account is:

Margin on long position = "Equity in account " /"Value of stock"

= "$9,000 － $4,320" /"$9,000" = 0.52 = 52%

Therefore, the investor will not receive a margin call.

C. Rate of return = "Ending equity in account － Initial equity in account" /"Initial equity in account"

= "$4,680 － $8,000" /"$8,000" = - 0.4150 = - 41.50%

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4 years ago

The following data pertains to activity and maintenance costs for two recent years:

Aleksandr-060686 [28]

Answer:

Y= 6000 + 0.75X

Explanation:

High and low cost technique

Using the a high and low technique, total cost can be analysed and separated into fixed and variable portion. This analysis helps in the forecast of cost and therefore important for the preparation of budget.

Variable cost of maintenance

= (Cost at high activity - Cost at low activity)/ (high activity - low activity)

VC per act. = ( $15000 - $12000)/(12,000-8000)

= $0.75 per activity

Fixed cost of maintenance

= Total cost at high activity - (VC per act × high activity)

= $15,000 - ( $0.75 × 12,000)

= $6,000

The cost formula will be:

Y= 6000 + 0.75X

Where Y = maintenance cost, X= level of activity

6 0

3 years ago

On January 1, 2020, the balance sheet of Naperville Company (a sole proprietorship) was as follows.

guapka [62]

Answer:

Explanation:

From the information povided:

(a) To compute the amount of goodwill paid by Chicago Corporation

Particulars Amount ($)

Accounts Receivable 100000

Inventory 170000

Plant & Equipment 400000

Land 90000

Customer List 4000

Trade Names 16000

NET ASSETS (A) 780000

Current liabilities 76000

Non-current liabilities 160000

NET LIABILITIES (B) 236000

∴

PURCHASE CONSIDERATION (A -B) 544000

Less: Cash Paid 580000

GODWILL 36000

In the books of Chicago Corporation, the Journal Entry to record the purchase of Naperville Company.

Account Name Dr. Cr.

Accounts Receivable A/C 100000

Inventory A/C 170000

Plant Equipment A/C 400000

Land A/C 90000

Customer List A/C 4000

Trade Names A/C 16000

Goodwill A/C 36000

Current liabilities A/C 76000

Non-Current Liabilities A/C 160000

Cash A/C 580000

The minimum required amount of goodwill that Chicago can amortize by the end of 2020 is $3600.This is because the amortization can take place for a period of 10 years.

8 0

3 years ago

You place an order for 1,600 units of Good X at a unit price of $53. The supplier offers terms of 2/30, net 50. a-1. How long do

andre [41]

Answer:

a-1. How long do you have to pay before the account is overdue?

50 days

a-2. If you take the full period, how much should you remit?

if you pay after the discount period (first 30 days) but before the 50th day, you must pay $84,800

b-1. What is the discount being offered?

2% if you pay within 30 days

b-2. How quickly must you pay to get the discount?

you have up to 30 days to pay the invoice and still get the discount

b-3. If you do take the discount, how much should you remit?

$83,104

c-1. If you don’t take the discount, how much interest are you paying implicitly?

$1,696

c-2. How many days’ credit are you receiving?

the total credit period is 50 days

7 0

3 years ago

Suppose the United States is currently producing 200 tons of hamburgers and 60 tons of tacos and Mexico is currently producing 4

4vir4ik [10]

Answer:

Explanation:

United States is producing 200 tons of hamburgers and 60 tons of tacos.

United States' opportunity cost for producing 1 ton of hamburgers

= $\frac{60}{200}$

= 0.3

United States' opportunity cost for producing 60 tons of tacos.

= $\frac{200}{60}$

= 3.33

So we see that US has a lower opportunity cost in producing hamburgers, so it has a comparative advantage in producing hamburgers.

Mexico is producing 40 tons of hamburgers and 50 tons of tacos.

Mexico's opportunity cost of producing a ton of hamburgers

= $\frac{50}{40}$

= 1.25

Mexico's opportunity cost of producing a ton of tacos

= $\frac{40}{50}$

= 0.8

So we see that Mexico has a lower opportunity cost in producing tacos, so it has a comparative advantage in making tacos.

Since US specializes in making hamburgers, it will produce 200 tons of hamburgers and 0 tons of tacos.

Mexico specializes in making tacos, it will produce 50 tons of tacos and 0 tons of hamburgers.

5 0

3 years ago