Answer:
$39,960
Explanation:
Considering all the transactions recorded;
When insurance is paid in advance, the entries required are
Debit Prepaid Insurance
Credit Cash account
As time elapses and the insurance expires,
Debit Insurance expense
As such amount that should have been posted to insurance expense
= $5400/3
= $1800
Adjustment required
= $5400 - $1800
= $3600
When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are
Debit Cash account and Credit Unearned fees or deferred revenue.
As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.
Hence the revenue will be deducted ($775).
When the inventory closing balance is understated, the cost of goods sold is overstated and as such the net income which is posted to the retained earnings will be understated
. $795
Interest expense to be recognized
= 12% * 3/12 * $22,000
= $660
the proper amount of net income for 2021
= $37,000 - $660 - $775 + $3600 + $795
= $39,960
In Limiting pricing, the price of goods and services is limited to levels that tend to discourage new entry into markets.
<h3>What is LImiting Pricing?</h3>
- A monopolist may utilize limiting pricing to deter entrants. If a monopolist sets a profit-maximizing price (MR=MC), the level of supernormal profit is so high that it attracts new enterprises into the market.
- Limiting pricing entails lowering the price enough to discourage entry. It results in lower short-term profit, but it allows the corporation to maintain its dominant position and long-term profitability.
- As a result, rather than encouraging new firms to participate, the monopolist may decide to establish a price that is lower than the profit-maximizing level, but yet high enough to allow it to make more profits than in a competitive market.
To learn more about Limiting Pricing refer to:
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Answer:
Fair Value adjustment $5,000 Dr.
Unrealized holding gain-net income $5,000 Cr.
Explanation:
Common stock purchase price = $500,000
North company outstanding stock = $10,000,000
5% stock of outstanding stock purchased :
(5/100) * $10,000,000
0.05 * 10,000,000
= $500,000
Fair value of investment = $505,000
Adjustment in fair value = $505,000 - $500,000 = $5000 ( Debit)
Unrealized holding gain-net income = $505,000 - $500,000 ( Credit)
Answer:
FV = $16126.99655 rounded off to $16127
Explanation:
To calculate the future value of a sum of money, we simply multiply the present value by (1 + interest rate) for the period of time that we require the amount to be compounded. Thus, the formula for the future value of a sum of amount with annual compounding is,
FV = P * (1+i)^t
Where,
- FV is future value
- PV is present value
- i is the interest rate
- t is the period of time
For semi annual compounding, we simply divide the annual i by 2 and multiply the t by 2. So, Future value of an amount with semi annual compounding will be,
FV = P * (1 + i/2)^t*2
FV = 12000 * (1 + 0.06/2)^5*2
FV = 12000 * (1+0.03)^10
FV = $16126.99655 rounded off to $16127
Answer:
0.811% per month is the amximum rate it can affor
or 9.732% annual rate with monhly compounding.
Explanation:
We have to solve for the rate at which the monthly payment equals 900 dollars.
C 900.00
time 240
rate r
PV $95,000.0000
Given the complexity of the formula we solve using excel or a financial calcualtor
we write on a1 =PV(A2;240;95000)
on a2 we write any number between 0 and 1
then we use goal seek tool adn define that we want A1 to be 95,000 by changing A2 (which is the argument for rate)
the value of A2 after this is our answer:
PV $95,000.0000
