Answer:
Money makes it easier to compare prices of different products.
Answer:
2273
Explanation:
In this question, we are asked to calculate Tom Tom’s maximum depreciation for this first year.
The term maximum depreciation is accounting principle talks about to what extent has the value of an asset been used.
To calculate his maximum depreciation, we need to be conversant with some conventions. The mid-month convention is what we need to understand here. What the convention assumes is that an asset which is placed into service during a given month is assumed to have been placed into
Such service at the middle of such month in question. Also, it is also assumed that disposing an asset at the beginning of one month or any other time of the month is same as disposing the said asset at the middle of the month. This is what the mid month convention is talking about.
It must also be noted that Residential property has a 27.5-year recovery period. The depreciation is thus $2,273 ($100,000 x 2.273%). This gives us the value of the maximum depreciation
Answer:
$10,500
Explanation:
Wall Welding should record warranty expense based on experience with past claims (3% of total sales). So if total sales were $350,000 you multiply that by 3% = $10,500.
The $4,000 left in the estimated warranty payable account belongs to previous years and should not alter the current year calculations.
Answer:
transaction balances
Explanation:
Transaction balances refers to the cash needed to pay daily transactions.
When a company has excess cash it means that this cash is setting still without producing any benefit. Cash is the most liquid asset, since it's already money. But cash doesn't earn any money, it even loses value due to inflation.
A company should have the minimum amount of money needed as cash, just enough to cover its daily needs (transaction balance). This way it can invest remaining cash in something that generates interest, doesn't matter if the interest rte is very small, something is better than nothing.
Answer: This miscategorization will impact Morgan's total inventory by making the inventory be $14,000 too high.
Explanation:
The goods that are in transit to the customers FOB shipping point are going to be part the inventory of the customer. This is not the inventory of the company that is selling the goods.
If they are listing the goods with the FOB destination this can then make the goods a part of the sellers inventory. This would result in the inventory being higher than it should be.
Morgan Enterprises' miscategorization of a $14,000 shipment from FOB shipping point to FOB destination means they didn't include something they should have in their inventory, leading to their total inventory being understated by $14,000.
In the context of inventory management, FOB shipping point means that the buyer takes ownership of the goods as soon as they leave the seller's premises. In contrast, FOB destination implies that the seller retains ownership until the goods reach the buyer's location.
Therefore, the $14,000 shipment should have been included in Morgan Enterprises' inventory as it was FOB shipping point. By wrongly classifying it as FOB destination, this means that Morgan Enterprises didn't count something they should have. So in this case, Morgan's total inventory would be understated by $14,000.
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