BUSINESS COLLEGE

Information related to Mingen back Company for 2015 is summarized below: Instructions: A. What amount of bad debt expense will Mingen back Company report if it uses the direct write-off method of accounting for bad debts? B. Assume that Mingen back Company estimates its bad debt expense to be 2% of credit sales. What amount of bad debt expense will Mingen back record if it has an Allowance for Doubtful Accounts credit balance of $4,000? C. Assume that Mingen back Company estimates its bad debt expense based on 6% of accounts receivable. What amount of bad debt expense will Mingen back record if it has an Allowance for Doubtful Accounts credit balance of $3,000? D. Assume the same facts as in (c), except that there is a $3,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Mingen back record? E. What is the weakness of the direct write-off method of reporting bad debt expense?

Answers

Answer 1
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Related Questions

On December 31, 2021, Interlink Communications issued 5% stated rate bonds with a face amount of $113 million. The bonds mature on December 31, 2051. Interest is payable annually on each December 31, beginning in 2022. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $). Determine the price of the bonds on December 31, 2021, assuming that the market rate of interest for similar bonds was 6%.Table values are based on:n = 30i = 6%Cash Flow Amount Present ValueInterest $111,300,000 $74,454,240Principal $100,000,000 $13,137,000Price of bonds $87,591,240
One year ago, you purchased 100 shares of Southern Foods common stock for $41.60 a share. Today, you sold your shares for $39.70 a share. During this past year, the stock paid $1.40 in dividends per share. What is your dividend yield on this investment?
Your best friend wants to borrow $2000 from you today for an emergency purchase they need to make that requires a cash payment. They promise to pay you back $1000 in 1 year (i.e. 12 months) and then pay you $1100 in two years (i.e. in 24 months). You would have to remove the money from your stock investment account which is earning on average a return of 5% (i.e. the effective yearly interest rate you are getting on your money is 0.05). Required:a. Is this a fair deal for you? Justify your answer with an engineering economics analysis and discussion of the situation by calculating the Net Present Value (NPV) for the scenario. b. Draw a Cash Flow Diagram for this situation.
Kirby just inherited $250,000. He would like to hire a financial advisor to provide financial advice and to manage the inheritance. Kirby has interviewed two potential advisors. The first person indicated that he would not charge for his advice but would charge a 4.50% commission on any mutual funds purchased when managing the $250,000. The second person indicated that she would charge $2,500 to write a financial plan and 1% of any asset she manages. Which advisor should Kirby choose if he wants the $250,000 managed and is interested in minimizing his upfront expenses?A. The first advisor because there is no planning fee.B. The second advisor because the total first-year cost is $5,000.C. The first advisor because the total first-year cost is $5,000.D. Because the cost is approximately the same, either advisor could be selected.
Pinewood Corp. used to have a strict hierarchical structure. Information was only given to those who required it. The new CEO, however, set up a flat organizational structure. The new system eliminates any barriers to information flow. Information that was previously available to managers alone is now given to employees as well. He also assigned mentors to new employees to help them in their jobs and enable them to perform better. Pinewood Corp. can now be described as a(n) ________ organization.

John's lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $500,000. He estimates that the boat he wants will cost $400,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 10% (compounded annually) to buy the boat at retirement?

Answers

Answer:

PV= $248,368.53

Explanation:

Giving the following information:

Future Value (FV)= $400,000

Number of periods (n)= 5

Interest rate (i)= 10% = 0.1

To calculate the present value (PV), we need to use the following formula:

FV= PV*(1í)^n

Isolating PV:

PV= FV/(1+i)^n

PV= 400,000 / (1.1^5)

PV= $248,368.53

Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,031,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total
Direct materials $2.04 $2,103,240
Direct labor 0.40 412,400
Variable manufacturing overhead 1.04 1,072,240
Fixed manufacturing overhead 1.44 1,484,640
Variable selling expenses 0.34 350,540
Totals $5.26 $5,423,060


The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 250,500 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.02 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order.

Required:
Prepare an incremental analysis for the Klean Fiber.

Answers

Answer:

Klean Fiber Company

Incremental Analysis for the Special order of 250,500 units of Y-Go undergarments:

Direct materials                                  $2.04         $511,020

Direct labor                                           0.40          100,200

Variable manufacturing overhead       1.04         260,520

Fixed manufacturing overhead            1.02         255,510

Total costs                                         $4.50      $1,127,250

Fixed manufacturing overhead           1.02          255,510

Incremental costs                             $3.48         $871,740

Explanation:

a) Data:

Full Capacity = 1,031,000

The per unit and the total costs at full capacity for Y-Go:

                                                 Per Undergarment       Total

Direct materials                                  $2.04         $2,103,240

Direct labor                                           0.40              412,400

Variable manufacturing overhead       1.04           1,072,240

Fixed manufacturing overhead            1.44           1,484,640

Variable selling expenses                    0.34            350,540

Totals                                                  $5.26       $5,423,060

b: In her decision to accept or reject the special order for 250,500 units of Y-Go undergarments by the U.S. Army, the Klean Fiber Company will only consider the relevant incremental unit cost of $3.48 and not the whole unit cost of $5.26.  The $3.48 cost excludes the fixed overheads or the selling and administrative expenses.

Chris Taylor: Attempt 1Question 1 (2 points)
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Which of the following is one of four steps you might use to improve your thinking?
a) Be reasonable.
b) Stick to your biases.
c) Be considerate and caring.
d) Avoid logic and reason.​

Answers

Be reasonable

Explanation:

Be reasonable where u use logic and strong motives which consequently improves your way of thinking

I hope that I answered u

Gus buys cupcakes every saturday morning. when he walks into the bakery, he always orders by saying, "give me $10 worth of cupcakes." what does this tell you about gus's elasticity of demand for cupcakes?

Answers

Elasticity of demand measures the responsiveness of quantity demanded to a change in the price of the good.

a. Perfectly elastic - The good is perfectly elastic when the consumer is ready to buy any quantity at a fixed price.

b. Perfectly inelastic- The good is perfectly inelastic when the change in the price of the good has not effect on its demand, that is when quantity demanded is same at whatever price.

So, because here Gus is ready to buy any units of cupcakes at a fixed price of $10, the demand for cupcakes should be perfectly elastic.

Snap On Inc has a beta of 2.67 and the expected market return is 0.19. In addition, Treasury bills (risk-free asset) are currently yielding 0.02. Find the expected return for Snap On Inc.

Answers

Answer: Expected Return = 0.47

Explanation:

Using the CAPM, The Capital Asset Pricing Model formulae , we have that  

Expected Return = Risk Free Rate + Beta(Market Return - Risk Free Rate)

Where

market return is 0.19

 Beta =2.67

risk-free asset= 0.02

Expected Return=0.02 +2.67 X (0.19 - 0.02)

=0.02 +2.67 X (0.17)

0.02 +0.4539

Required Return=0.47

Therefore Expected Return  for Snap On Inc is 0.47

At December 31, 2019, Swifty Corporation reported the following as plant assets.Land $3,980,000
Buildings $28,210,000
Less: Accumulated depreciation-buildings 13,200,000 15,010,000
Equipment 48,670,000
Less: Accumulated depreciation-equipment 4,980,000 43,690,000
Total plant assets $62,680,000
During 2020, the following selected cash transaction occurred.

April 1 Purchased land for $2,200,000
May 1 Sold equipment that cost $840,000 when purchased on January 1, 2016. The equipment was sold for $504,000
June 1 Sold land purchased on June 1, 2010 for $1,450,000. The land cost $399,000
July 1 Purchased equipment for $2,480,000
Dec. 31 Retired equipment that cost $491,000 when purchased on December 31,2010. The company received no proceeds related to salvage.
-Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.

-Record adjusting entries for depreciation for 2020. Credit account titles are automatically indented when the amount presented in the problem. If no entry is required, select "No Entry for the account titles and enter 0.

Answers

Answer:

April 01 2020

Land                                                            Debit          $ 2,200,000

Cash                                                           Credit                             $2,200,000

To record purchase of land

May 01 2020

Cash                                                            Debit         $ 504,000

Allowance for depreciation equipment    Debit         $ 363,720

Equipment                                                   Credit                              $ 840,000

Gain on sale of equipment                         Credit                              $   27,720

To record sale of equipment and to recognise gain on sale

June 01 2020

Cash                                                              Debit      $ 1,450,000

Land                                                              Credit                            $ 399,000

Gain in sale of land                                      Credit                            $1,051,000

To record sale of land and gain on the sale

July 01 2020

Equipment                                                     Debit    $ 2,480,000

Cash                                                              Credit                         $ 2,480,000

To record purchase of equipment

December 31 2020

Allowance for depreciation                          Debit    $ 491,000

Equipment                                                      Credit                        $ 491,000

To record retirement of equipment

The adjusting entry for depreciation is as follows:

December 31 2020

Depreciation expense - Equipment             Debit  $ 4,985,000

Depreciation expense - Buildings                Debit  $   578,200

Allowance for depreciation - Equipment     Credit                     $ 4,985,000

Allowance for depreciation - Buildings        Credit                     $    578,200

Explanation:

Computation for Depreciation expense for the year

Equipment Jan 01 2020                        $ 48,670,000  for 4 months @ 10 %

Sales - May 01 2020                              $(     840,000)

Adjusted balance May 01 2020            $ 47,830,000 for 2 months @ 10 %

Purchases July 01 2020                        $   2,480,000

Adjusted balance July 01 2020            $  50,310,000 for 6 months @ 10 %

Depreciation expense for 4 months = $ 48,670,000*10 % *4/12 = $1,622,333

Depreciation expense for 2 months = $ 47,830,000*10 % *2/12 = $   797,167

Depreciation expense for 6 months = $ 51,310,000*10 % *6/12 =$ 2,565,500          

Total depreciation equipment                                                      $ 4,985,000

Depreciation on buildings     $ 28,910,000 * 2 %                       $     578,200

Depreciation has to be recorded for full year on assets retired on December 31 2020

Computation of gain and loss on sale of equipment

Cost of equipment  purchased on January 1 2016                       $ 840,000

Depreciation rate                                          10 %

Equipment sold on May 01 2020

Depreciation charged for 4 years and 3 months @ 10 %

$ 840,000 * 4.33 *10 %                                                                   $  363,720

Net book value of equipment disposed on May 01 2020            $ 476,280

Sale value of equipment                                                                  $ 504,000

Gain on sale of equipment                                                             $ (27,720 )                                  

The gain on sale of land is the difference between the cost and sales proceeds since land is not depreciated

Sale proceeds - Cost = $ 1,450,000 - $ 399,000 =                      $ 1,051,000

The assets that was retired on Dec 31 2020 was purchased on December 31 2010 and was considered for depreciation for 10 years and was fully depreciated and had ni book value on the date of retirement
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