The roommates would rent 3 movies to maximise total surplus
Each roommate would pay $9
The roommates would watch the films that yields a positive consumer surplus
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Consumer surplus = willingness to pay – price of the good
Willingness to pay is the highest amount a consumer is willing to pay for a good or service
Consumer surplus is positive if willingness to pay exceeds the price of the movie and it is negative when the price of the good exceeds the willingness to pay of the consumers
Total willingness to pay for the first movie = 10 + 9+ 8+ 3 = 30
Total willingness to pay ($30) exceeds the price of the movie ($12). Consumer surplus is positive. The first movie will be rented
Total willingness to pay for the second movie = 8+ 7+ 6+ 2 = 23
Total willingness to pay ($23) exceeds the price of the movie ($12). Consumer surplus is positive. The second movie will be rented.
Total willingness to pay for the third movie = 6+ 5+ 4+ 1 = 16
Total willingness to pay ($16) exceeds the price of the movie ($12). Consumer surplus is positive. The third movie will be rented.
Total willingness to pay for the fourth movie = 4+ 3+ 2+ 0 = 9
Total willingness to pay ($9) is less than the price of the movie ($12). Consumer surplus is negative. The fourth movie will be rented.
Only three movies would be rented.
Total cost of the 3 three movies = $12 x 3 = $36
Cost to each roommate if the bill is split equally = $36 / 4 = $9
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At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $308,000 and in Allowance for Uncollectible Accounts of $910 (credit) before any adjustments. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 4% of accounts receivable. Bad debt expense for the year should be: Multiple Choice $13,230. $12,320. $11,410. $11,911.
Brian lives in San Francisco and runs a business that sells guitars. In an average year, he receives $704,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $404,000; he also pays wages and utility bills totaling $286,000. He owns his showroom; if he chooses to rent it out, he will receive $3,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Brian does not operate this guitar business, he can work as an accountant, receive an annual salary of $20,000 with no additional monetary costs, and rent out his showroom at the $3,000 per year rate. No other costs are incurred in running this guitar business.
Identify each of Jake's costs in the following table as either an implicit cost or an explicit cost of selling guitars.
Implicit Cost Explicit Cost
The wholesale cost for the guitars that Charles pays
the manufacturer.
The wages and utility bills that Charles pays.
The salary Charles could earn if he worked as an accountant.
The rental income Charles could receive if he chose to rent
out his showroom .
Complete the following table by determining Jake's accounting and economic profit of his guitar business.
Profit (Dollars)
Accounting Profit
Economic Profit
If Jake's goal is to maximize his economic profit, he___stay in the guitar business because the economic profit he would earn as an accountant would be___.
Answer:
The wholesale cost for the guitars that Charles pays the manufacturer - Explicit Cost
The wages and utility bills that Charles pays. - Explicit Cost
The salary Charles could earn if he worked as an accountant. - Implicit Cost
The rental income Charles could receive if he chose to rent
out his showroom - Implicit Cost
$14000
$-9000
should not
$6,000
Explanation:
Accounting profit= total revenue - explicit cost
Total revenue =price x quantity sold
Explicit cost includes the amount expended in running the business.
They include rent , salary and cost of raw materials
$704,000 - ($404,000 + $286,000) = $14000
Economic profit = accounting profit - implicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
Implicit costs = 20,000 + 3000 = 23,000
14,000 - 23,000 = -9000
The information necessary to conduct a bottom-up estimate of project time and cost starts with the ___________. Multiple Choice work package level 5 elements of the PBS milestones level 4 elements of the WBS planning horizon
The information necessary to conduct a bottom-up estimate of project time and cost starts with the work package.
Bottom-up estimate builds detailed cost and time estimates from the lowest level of detail for the work package. This process improves the project's ability to be achieved within the estimated amounts of money and time.
The work package encompasses the required steps to complete the building blocks of the work breakdown structure and so actualize the project objectives.
In project management, the work requirements are broken down into work packages. Such breakdown enables various teams to simultaneously or sequentially work on the different project components.
Thus, information required for conducting a bottom-up estimate of project time and costs starts with the work package and not level 5 PBS elements or level 4 WBS elements.
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Kết luận sự thích ứng tâm lý của sinh viên năm nhất
Answer:
I think I should ask in English language
If the cost of the beginning work in process inventory is $85,000, costs of goods manufactured is $960,000, direct materials cost is $344,000, direct labor cost is $224,000, and overhead cost is $329,000, calculate the ending work in process inventory.
Answer:
$22,000
Explanation:
Costs of goods manufactured = Opening Work in Process + Manufacturing Costs Incurred during the Period - Ending Work in Process
thus,
Ending Work in Process = Opening Work in Process + Manufacturing Costs Incurred during the Period - Costs of goods manufactured
therefore,
Ending Work in Process = $85,000 + ( $344,000+ $224,000+ $329,000) - $960,000
= $22,000
A company purchases and uses 40000 gallons of materials for which they paid $3 a gallon. The materials price variance was $90000 favorable. What is the standard price per gallon?
Answer:
the standard price per gallon is $5.25
Explanation:
the computation of the standard price per gallon is given below;
Materials Price Variance = Actual Quantity × (Standard Price - Actual Price)
$90,000 = 40,000 × (Standard Price - $3)
$2.25 = Standard Price - $3
Standard Price = $5.25
Hence, the standard price per gallon is $5.25
The same should be considered
What promotional strategy is being employed when Blue Cross/Blue Shield (a health insurance company) runs advertisements targeting Boeing Co. employees, in hopes that they will persuade their bosses to consider adopting a Blue Cross/Blue Shield insurance plan for their company
Answer:
Pull Strategy
Explanation:
Distribution Strategies
This simply covers the most favorable way to deliver product or service to target market/audience.
Types of distribution strategies
They includes :
1. Push Strategy:
2. Pull Strategy:
3. Combination of both: that is the use of both push and pull strategies.
Pull Strategy
In this type of strategy, marketing in this aspect is solely directed on the end consumer, who thereafter demands it from the retailer, who also then demands it from the wholesaler and lastly then the manufacturer. It is simply pulling of products through the channel. This strategy is used when consumers gather information and decide about their purchases before entering the retail outlet. Company moves their products through the distribution channel by building consumer demand for the products and thereafter influence/convince retailers to stock these products.
Types of marketing communications used in Pull strategy selling. They includes:
1. Advertising,
2. Consumer sales promotions,
3. Public relation.
When a company uses advertising to increase demand for their product or services, the pull promotional strategy is used. Blue Cross/ Blue shield uses the pull promotion strategy.
What is a strategy?
A strategy refers to the method or plan used to achieve the organization's goals.
A Pull marketing strategy is a type of strategy employed by an organization to create the demand for a product by various means like Sales promotion and discount, Advertising, Email marketing, Social media networks, etc.
Different marketing activities are involved to pull customers to their products.
Therefore, Blue cross employed the pull promotional strategy to target Boeing co. employees.
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Assume that Corn Co. sold 7,600 units of Product A and 2,400 units of Product B during the past year. The unit contribution margins for Products A and B are $34 and $59, respectively. Corn has fixed costs of $378,000. The break-even point in units is a.9,450 units b.11,340 units c.7,560 units d.14,175 units
,Answer: a. 9,450 units
Explanation:
You need to find the weighted average contribution margin for both products.
Product A
Weighted average contribution margin = Contribution margin * Units sold / Total units sold
= 34 * 7,600 / (7,600 + 2,400)
= $25.84
Product B
= 59 * 2,400 / 10,000
= $14.16
Breakeven point in units = Fixed costs/ (Weighted average contribution margin of both A and B)
= 378,000 / (25.84 + 14.16)
= 9,450 units
Assume market interest rates have risen substantially in the 5 years since an investor purchased Treasury bonds that were offering a 3% return over their 15-year life. If the investor sells now, he or she is likely to realize a total return that is:__________
A. greater than 6%.
B. less than 6%.
C. equal to 2%.
D. equal to 6%.
Answer: B. less than 6%.
Explanation:
Market interest rates have risen since the investor purchased the treasury bonds which means that the treasury bonds will be less sought after now because they offer a lower return than can be found in the market even if risk adjusted.
The investor will therefore only be able to sell it for a lower price which means that they will receive a lower rate for it. As we cannot say for certain what this rate will be, it is best to say that it will be under 6%.
WHAT ARE THE NEW LINKEDIN LIMITS?
Answer:
100 invites per week.
The new invite limits have been introduced by LinkedIn according to which you can’t send more than 100 invites per week. When you have reached the limit, a notification will pop up saying you’ve reached weekly limits.
You can’t do anything about it until the new week starts and the weekly limit resets.
Frank is a 60- year-old man who is well-loved in his community since he was a boy. He is someone who is outgoing, a party lover, and love to have fun hanging out with peers. Frank is confident about life. From an early age he knew exactly what he wanted to become, and now as a man, he is confident about his career and family and want to leave them a good life when he departs this life. Frank express that he is not afraid of dying but he wants them to be ok when he is gone. At work Frank is helpful to his colleagues, and even in his community he is well-known among the elderly since he is always putting on Christmas treats for them. Imagine that Frank is your colleague, and that your boss asks you to write a character reference for Frank. Using Jung’s personality theory to guide your writing, present a minimum one- page character reference in which you spell out Franks behaviour, his outlook on life, his philosophy about people and all the other important things you know about him. Ensure you point out how these different parts of Franks life fits into Jung’s theory and overall what Jung’s theoretical concept says about him.
Answer:
Jung's personality theory-
Carl Gustav Jung's research was deep-rooted in psychoanalysis and was a Swiss Psychiatrist. He was greatly influenced by Freud and had also worked with him. He had research in personality, the human psyche, and dream analysis.
Jung gave this theory based on different learning styles or attitudes. Jung distinguished the human personality on the basis of types of attitudes:
Introvert vs. Extrovert Perceiving vs. Judging Thinking vs. Feeling Intuition vs. SensationExplanation:
Introvert people are those that have their own world, own privacy, feeling exhausted while having interactions with others and obtain energized in their own company, wish to observe others before getting started, quiet, first listen, watch then reflect. Extrovert people are those that like to interact with different people, like to enjoy parties, get energized within the outer world, would like working in groups, like to socialize, able to jump in without prior guidance. Frank has an 'extroversion' personality who may be a lover of outgoing and enjoying parties with peers, likes to socialize, and generating ideas from people. Perceiving- people that don't have firm decisions and alter their decisions on getting new information. Judging- people that are firm on their decisions and don't change their decisions on any new information. Frank may be a judging sort of person, he has firm decisions. Thinking- Those people that make decisions on the idea of some reason and logic but not on the idea of emotions. Feeling- Those people that believe in relationships first and make their decisions emotionally. Frank may be a Thinking sort of one that isn't afraid to die and is prepared to go away his family to be ok. Intuition- wish to work briefly sessions, considering ideas for the longer term, not practical, always brooding about future goals, belief in theories. Sensation- specialize in this, reasonable and practical, solver. Frank is wise as he's not a daydreamer, confident about his life, and knows what to try to do in his life and for his family.A rich singer has donated $450,846 to endow a university professorial chair in Bohemian Studies. If the money is invested at 12.65%, how much can be withdrawn each year, ad infinitum (indefinitely), to pay the Professor of B.S.
Answer:
Annual withdrawal= $57,032.02
Explanation:
Giving the following information:
Initial investment (PV)= $450,846
Interest rate (i)= 12.65%
To calculate the annual withdrawal, we need to use the following formula:
PV= Cf / i
Cf= annual cash flow
450,846= Cf / 0.1265
450,846*0.1265 = Cf
Cf= $57,032.02
A large company has an inspection system for the batches of small compressors purchased from vendors. A batch typically contains 15 compressors. In the
inspection system, a random sample of 5 is selected and all are tested. Suppose there are 2 faulty compressors in the batch of 15.
(a) What is the probability that for a given sample there will be 1 faulty compressor?
(b) What is the probability that inspection will discover both faulty compressors?
Solution :
Given data :
Total number compressors in a batch = 15 compressors
Number of samples to be tested = 5
Let the number of faulty compressors out of 15 compressors = 2
a) Therefore, the ways of selecting [tex]1[/tex] faulty and [tex]4[/tex] good compressor is
[tex]$=^2C_1 \times ^{13} C_4$[/tex]
The total number of ways = [tex]$^{15}C_5$[/tex]
Therefore, the probability is
[tex]$=^2C_1 \times ^{13}C_4 \times ^{15} C_5$[/tex]
[tex]=0.4761[/tex]
b). Number of ways for selecting [tex]2[/tex] faulty and [tex]3[/tex] good compressor is
[tex]$^{13}C_3[/tex]
Thus the probability
[tex]$=\frac{^{13}C_3}{^{15}C_5}$[/tex]
[tex]$=0.0952$[/tex]
Assume that Zonk is a potential leveraged buyout candidate. Assume that the buyer intends to put in place a capital structure that has 70 percent debt with a pretax borrowing cost of 14 percent and 30 percent common equity. Compute the revised equity beta for Zonk based on the new capital structure.
Answer: 4.35
Explanation:
The revised equity beta for Zonk based on the new capital structure will be gotten as follows:
= 1.13 × [1 + (1 - 35%)][70% /30%]
= 1.13 × [1+(1-0.35)][0.70/0.30]
= 1.13 × [1 + 0.65][2.33]
= 1.13 × (1.65)(2.33)
= 4.35
Therefore, the revised equity beta for Zonk is 4.35.
During 2015, Orton Company earned net income of $464,000 which included deprecia-tion expense of $78,000. In addition, the company experienced the following changes in the account balances listed below:
Increases Decreases
Accounts payable $45,000 Accounts receivable $12,000
Inventory 36,000 Accrued liabilities 24,000
Prepaid insurance 33,000
Calculate net cash flow from operating activities using indirect method:______.
Answer:
$572,000
Explanation:
Cash flow from operating activities
Net income $464,000
Adjustment for Non-Cash items :
Depreciation $78,000
Adjustment for Changes in Working Capital items :
Increase in Accounts payable $45,000
Increase in Inventory ($36,000)
Decrease in Accounts receivable $12,000
Decrease in Accrued liabilities ($24,000)
Decrease in Prepaid insurance $33,000
Net cash flow provided by operating activities $572,000
thus,
net cash flow from operating activities using indirect method is $572,000.
A corporation issues for cash $1,000,000 of 8%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 10%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?
a. The amount of the annual interest expense is computed at 8% of the bond carrying amount at the beginning of the year.
b. The amount of the annual interest expense gradually decreases over the life of the bonds.
c. The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.
d. The amount of unamortized premium decreases from its balance at issuance date to a zero balance at maturity.
Answer:
d.The unamortized discount decreases from its balance at issuance date to a zero balance at maturity
Explanation:
The amount of annual interest is the carrying amount at the beginning of each year multiplied by the market rate of interest of 10%(not the discount rate of 8%)
Also, a bond whose market interest rate is higher than the coupon rate would be issued at a discount(not at a premium, let alone having an unamortized premium)
Goods in transit are included in a purchaser's inventory: Multiple Choice At any time during transit. When the goods are shipped FOB shipping point. When the supplier is responsible for freight charges. If the goods are shipped FOB destination. After the half-way point between the buyer and seller.
Answer:
When the purchase s responsible for paying freight charges
Explanation:
Goods in Transit can be regarded as merchandise as well as other types of inventory which has already shipped out of shipping dock of the seller, but it has not gotten to the receiving dock of the buyer.This concept is utilized in order to know maybe the buyer or the seller of that particular goods has taken the possession of that particular goods and to know the party that Is paying for transport. The Freight charge, can be regarded as as freight rate, and this is amount that is been paid to a carrier company so that transportation of goods to agreed location will be possible.
It should be noted that Goods in transit are included in a purchaser's inventory
When the purchase s responsible for paying freight charges
Can you help me
please
Answer:
united nation childrens funds
Explanation:
i hope it helpful
In a given year, if we sell 100 pounds of apples and 100 pounds of oranges, then the contribution to GDP from selling the oranges will be the same as the contribution to GDP from selling the apples.
a. True
b. False
Answer:
B
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Consumption spending includes spending by households on goods and services. Consumption spending includes :
spending on durables - e.g. laptop
spending on nondurables - e.g. clothes, food
spending on services - e.g. payment of hospital bill
the purchase of a textbook by a student is an example of consumption spending on durable goods
Investment - It includes purchases of goods and services made by businesses in the production of goods and services
Government spending - It includes government consumption expenditure and gross investment.
The GDP would differ because the prices of oranges and apples are different
For example, if the price of an apple is $4 and the price of an orange is $1.
The contribution of apples to GDP =$4 x 100 = $400
The contribution of oranges to GDP =$1 x 100 = $100
The contribution margin format income statement: Multiple Choice is most frequently used for financial statement reporting purposes. uses a behavior pattern classification for costs rather than a functional cost classification approach. emphasizes that all costs change in proportion to any change in revenues. results in a larger amount of operating income than the traditional income statement format.
Answer: uses a behavior pattern classification for costs rather than a functional cost classification approach.
Explanation:
The behavioral pattern of a cost refers to its relationship with the volume of production or sales. Costs that change along with the volume of production or sales are termed "variable costs" and costs that do not change are termed "fixed costs".
The Contribution Margin income statement classifies costs by whether they are variable or fixed which is why it is said that the format uses a behavioral for cost classification pattern not a functional one.
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ng & Certifications
2022 Ethics and Compliance Test
2022 Ethics and Compliance Test
W PREVIOUS
X EXIT
Janine, currently enrolled in a 3-star plan,
discovers there is 5-star plan available where
she lives. She asks her agent, Josh, to enroll
her in the 5-star plan. Josh can advise Janine
of each of the following except:
Josh should tell Janine that she can only change her current plan to a 5-
star plan during the Annual Election Period.
Josh should tell Janine that she can only use the 5-Star SEP once per
calendar year.
Josh should tell Janine that she can change her current plan to a 5-star
Answer:
Janine and Josh
Josh can advise Janine of each of the following except:
Josh should tell Janine that she can only change her current plan to a 5-
star plan during the Annual Election Period.
Explanation:
The Special Election Period (SEP) for the 5-star Medicare Plan lasts one week, that is, between Nov. 30 and Dec. 8. However, there is an Annual Enrollment Period (AEP) that lasts from October 15th to December 7th. During the annual enrollment period, any plan holder can change her Medicare plan, depending on its availability in her area.
Kraus Steel Company has two departments, Casting and Rolling. In the Rolling Department, ingots from the Casting Department are rolled into steel sheet. The Rolling Department received 46,300 tons from the Casting Department in October. During October, the Rolling Department completed 54,000 tons, including 11,900 tons of work in process on October 1. The ending work in process inventory on October 31 was 4,200 tons.
Required:
How many tons were started and completed during October?
Answer:
42,100 tons
Explanation:
Units Completed = Beginning Work in Process Units Completed + Units started & Completed during October
54,000 = 11,900 + Units started & Completed during October
Units started & Completed during October = 54,000 - 11,900
Units started & Completed during October = 42,100
So, the number of tons were started and completed during October is 42,100 tons.
Kluber, Inc. had net income of $911,000 based on variable costing. Beginning and ending inventories were 56,100 units and 54,200 units, respectively. Assume the fixed overhead per unit was $1.80 for both the beginning and ending inventory. What is net income under absorption costing?
a. $811,730
b. $904,160
c. $1,010,270
d. $907,580
e. $911,000
Answer:
Net operating income (absorption)= $907,580
Explanation:
Giving the following information:
Fixed overhead per unit= $1.80
Net income= $911,000 (variable costing)
Beginning inventory= 56,100 units
Ending inventory= 54,200 units
Under absorption costing, fixed manufacturing overhead is a product cost. We need to incorporate into the cost of goods sold the fixed overhead from beginning inventory and deduct the fixed overhead allocated into ending inventory.
Net operating income= 911,000
Less:
Fixed overhead beginning inventory= (1.8*56,100)
Add:
Fixed overhead ending inventory= (1.8*54,200)
Net operating income (absorption)= $907,580
Aber Inc. plans to develop a shopping center. In the first quarter, they spent the following amounts: Acquisition of land $15000 Surveys and legal fees 600 Land clearing 200 Fencing 1000 Install lighting and signage 860 What amount should be recorded as the cost of land in the books of the corporation
Answer: $15,800
Explanation:
When it comes to fixed assets like land, all costs that were necessary to acquire the land and to get it ready for use are capitalized - included in the cost of the fixed assets.
Cost of land = Acquisition cost + Surveys and legal fees + Land clearing to get it ready for use
= 15,000 + 600 + 200
= $15,800
Company XYZ is working on a marketing strategy for a new oral hygiene product and just discovered that XYZ's biggest competitor is launching a very similar product a month later. In conducting a SWOT analysis, the launch of the competitor's product represents an opportunity.
a. True
b. False
Answer:
XYZ Company
In conducting a SWOT analysis, the launch of the competitor's product represents an opportunity.
b. False
Explanation:
The launch of the competitor's product represents a threat to XYZ Company. It reduces XYZ Company's market competitiveness and profitability. XYZ Company may even be driven out of the market by the competitor, thus leading to massive loss for the company. However, threats must be overcome and turned into opportunities for future product development.
Conflicts of interest a. have become less frequent today. b. always involve personal financial gain. c. are morally worrisome only when the employee acts to the detriment of the company. d. occur when employees have special or private interests that are substantial enough to interfere with their job duties.
Answer:
D
Explanation:
Conflicts of interest occur when employees have special or private interests that are substantial enough to interfere with their job duties
For example, imagine that there is an analyst who works in a firm. He comes across material non public information that the value of the shares of the company is about to plummet. This analyst has shares in the company.
A conflict of interest arises, he can either trade his shares and engage in insider trading or not trade his shares so as to protect the integrity of the capital market
the ethical step is not to trade
Using the following information, what is the amount of gross profit?
Purchases $37,000
Merchandise inventory, September 1 6,100
Selling expense 1,050
Merchandise inventory, September 30 6,800
Sales 91,000
Interest expense 1,040
Administrative expense 1,010
Rent revenue 1,700
Answer:
Gross profit= $54,700
Explanation:
Giving the following information:
Purchases $37,000
Merchandise inventory, September 1 6,100
Merchandise inventory, September 30 6,800
Sales 91,000
First, we need to calculate the cost of goods sold:
COGS= beginning finished inventory + cost of goods purchased - ending finished inventory
COGS= 6,100 + 37,000 - 6,800
COGS= $36,300
Now, the gross profit:
Gross profit= sales - COGS
Gross profit= 91,000 - 36,300
Gross profit= $54,700
Heath loves candy bars and gummy bears. After using his entire $30 budget at the local supermarket he finds that the marginal utility from the last candy bar he consumed was 30 and the last bag of gummy bears was 60. Assuming he has maximized his utility, what could be true about the prices of gummy bears and candy bars?
Answer:
Bag of gummy bears must cost twice as that of candy bar.
Explanation:
The cost of candy bar should be less than gummy bear because marginal utility of candy bar is lower than gummy bear. The candy bar will be consumed more therefore its price should be lower. When the price of good will be lower, it will be consumed more.
At December 31, Folgeys Coffee Company reports the following results for its calendar year.
Cash sales $918,000
Credit sales 318,000
Its year-end unadjusted trial balance includes the following items.
Accounts receivable $143,000 debit
Allowance for doubtful accounts 6,800
Required:
Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (1) 5% of credit sales, (2) 3% of total sales and (3) 8% of year-end accounts receivable.
Answer:
1. Dr Bad debts expense $15,900
Cr Allowance for Doubtful Accounts $15,900
2. Dr Bad debts expense $37,080
C Allowance for Doubtful Accounts $37,080
3. Dr Bad debts expense $18,240
Cr Allowance for Doubtful Accounts $18,240
Preparation of the adjusting entry to record bad debts expense
1. Dr Bad debts expense $15,900
Cr Allowance for Doubtful Accounts $15,900
(318,000*5%)
2. Dr Bad debts expense $37,080
C Allowance for Doubtful Accounts $37,080
[(918000+318,000)*3%]
3. Dr Bad debts expense $18,240
Cr Allowance for Doubtful Accounts $18,240
[(143,000*8%) + 6800]
Hill Company uses the periodic inventory system. It records a transaction that increases the balances in its purchases and accounts payable accounts. Which of the following is true about Hill Company?
a. When the related merchandise is sold, the purchases account will be decreased by the related cost of goods sold.
b. The manner in which this transaction was recorded indicates that Hill returned $6,000 of merchandise to a supplier.
c. The balance in the account will appear on the balance sheet at year end.
d. The manner in which this transaction was recorded indicates that Hill purchased inventory on account.
Answer:
Hill Company
The true statement about Hill Company is:
d. The manner in which this transaction was recorded indicates that Hill purchased inventory on account.
Explanation:
Purchases made on account (or credit terms) are debited to the Purchases account (periodic inventory system) and credited to the Accounts Payable account. This increases the amount of purchases and the accounts payable account respectively by the same amount. If Hill Company uses the perpetual inventory system, the debit goes to the Inventory account and the corresponding credit to the Accounts Payable account.
