Ignoring income taxes, the annual net income amount used to calculate the Accounting Rate of Return is Average Annual Profit / Average Investment.
The Accounting Rate of Return (ARR) is the average net income which an asset is expected to generate divided by its average capital cost, and thus it is expressed as an annual percentage.
The ARR's formula is used to make capital budgeting decisions. It is used in situations where companies are deciding on whether or not to invest in an asset based on its expected future net earnings.
Hence, the Accounting Rate of Return is calculated by Average Annual Profit / Average Investment.
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Answer:
$122.87
Explanation
Final balance = initial balance + deposits + interest - Withdrawals
Therefore,
Given that
Initial balance = 122.00
Deposit = 68.52 + 46.35 = 114.87
Interest = 1.50
Withdrawals = 95.00 + 20.50 = 115.50
Thus,
Final balance = 122.00 + 114.87 + 1.50 - 115.50
= 238.37 - 115.50
= 122.87
Final balance = $122.87
Answer:
Following Becky's estimation, the bad debt expense must be equal than the 8% of the total credit, less the value already booked in the balance sheet accounts (doubtful accounts).
Explanation:
In this case, 2,000,000*8%=160,000. Then this 160,000 must be subtracted to 2,200 (160,000-2,200=157,800). Finally, the bad debt expense to be reported is $157,800
Answer:
Profit for holiday month is $4,000
Explanation:
Given:
Average sales in a typical month = $1,600
Fixed cost is $800 per month
Sales in festive month is 300% above average typical month sale. So, sales in festive month is $4,800 (1,600 × 300%). Fixed cost remains same irrespective of number of units sold.
Profit = Sales - Fixed cost
= 4,800 - 800
= $4,000
If profit in a typical month is $800 (1,600 - 800), retail store earns profit of $4,000 in a festive month.