Answer:
April 1
Debit : Patent $1,500,000
Credit : Cash $1,500,000
December 31
Debit : Amortization $125,000
Credit : Accumulated Amortization $125,000
December 31
Debit : Impairment loss $6,000,000
Credit : Accumulated Impairment loss $6,000,000
Explanation:
Both the Amortization and Impairment loss reduce the value of assets. They are therefore expenses accounted in Income Statement.
Amortization : is the loss of value of an asset due to passage of time.
Amortization Expense = (Cost - Residual Amount) ÷ Useful Life
= ( $1,500,000 - $ 0) ÷ 12
= $125,000
Impairment loss : is the excess of the Carrying Amount of an Asset over its Recoverable Amount( Higher of Value in Use and Fair Value less Cost to Sell)
The student’s questions are regarding three transactions under business accounting: the acquisition of a patent, amortization of the patent rights, and impairing goodwill. Each requires different treatments in journalizing and adjusting entries.
The subject pertains to accounting and how to journalize transactions in business. Thus, it falls under the Business category and the complexity suggests it's at the College level.
To record the acquisition of the patent worth $1,500,000, you would first debit (increase) the Patents account and then credit (decrease) the Cash or Payables account. This aligns with the concept accounting for patents.
To journalize the adjusting entry for the amortization of the patent rights on December 31, divide the $1,500,000 over its 12 years useful life, which calculates to $125,000 each year. On December 31, debit (increase) the Amortization Expense account for $125,000 and credit (decrease) the Patents account for $(125,000).
To journalize the adjusting entry on December 31 for the impaired goodwill of $6,000,000, you would debit (increase) the Impairment Loss account for $6,000,000, and then credit (decrease) the Goodwill account for $6,000,000. This represents impaired goodwill recording.
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Answer:
a)no. 2 wooden pencils - perfectly competitive market
b) copper - perfectly competitive market
c) Local public utilities- monopoly market
d) Peanut butter - monopolistic competitive market
e) Lipstick - monopolistic market
All no 2 pencils are identical each other. There are many sellers of pencils. And there's usually a general price for the pencils. Also, there are little barriers to entry or exit of firms. So the market for the no 2 pencils are perfectly competitive firms.
Also, coppers are identical to each other. They can't be differentiated from each other. There is usually a standard price for copper. So the market for copper is perfectly competitive.
For local public utilities, there is usually one firm providing the service. Also, because of the high cost of setting up these services, there is a high barrier to the entry of firms into the industry. This is why local public utilities are a monopoly.
Peanut butter and lipsticks are perfectly monopolistic firms because:
A. There are many firms selling this product but the products are usually differentiated.
B. Also, firms sets the price for their products
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
A monopolistic competition is when there are many firms selling differentiated goods. The demand curve is downward sloping
A monopoly is when there is only one firm operating in the industry. There are high barriers to entry and exit of firms in the industry.
I hope my answer helps you
a. Determine the balance in the Retained Earnings account as of January 31, Year 1.
b. Determine the balance in the Revenue and Expense accounts as of January 31, Year 1.
c. Determine the balance in the Retained Earnings account as of December 31, Year 1, before closing.
d. Determine the balances in the Revenue and Expense accounts as of December 31, Year 1, before closing.
e. Determine the balance in the Retained Earnings account as of January 1, Year 2.
f. Determine the balance in the Revenue and Expense accounts as of January 1, Year 2.
Answer:
a. $2,700
b. Revenue = $7,500 and Expenses = $4,800
c. $37,700
d. Revenue = $93,500 and Expenses = $55,800
e. $37,700
f. Revenue = $0 and Expenses = $0
Explanation:
a. Balance in the Retained Earnings account as of January 31, Year 1.
Revenue $7,500
Less Expenses ($4,800)
Net Profit $2,700
Retained Earnings Balance = Opening Retained Earnings + Profit - Dividends
= $ 0 + $2,700 - $ 0
= $2,700
b. Balance in the Revenue and Expense accounts as of January 31, Year 1.
Revenue = $7,500
Expenses = $4,800
c. Balance in the Retained Earnings account as of December 31, Year 1, before closing.
Retained Earnings Balance = Opening Retained Earnings + Profit - Dividends
= $2,700 + ($86,000 - $51,000) - $0
= $37,700
d. Balances in the Revenue and Expense accounts as of December 31, Year 1, before closing.
Revenue ($7,500 + $86,000) = $93,500
Expenses ($4,800 + $51,000) = $55,800
e. Balance in the Retained Earnings account as of January 1, Year 2.
Retained Earnings of December 31, Year 1 = Retained Earnings of January 1, Year 2
= $37,700
f. Balance in the Revenue and Expense accounts as of January 1, Year 2.
Revenue = $0
Expenses = $0
Answer:
Explanation:
December 31, 2018 Amount. Interest Rate Total Interest expense $944,646 x 5.0% = $47,232.3 Cash. $870,000 x 5.5% = $47,850 of premium on bonds $618
June 30, 2019AmountInterest Rate
Total Interest expense $944,646 x 5.0% = $47,232.3
Cash$870,000 x 5.5% = $47,850
of premium on bonds $ 464 No Date General Journal Debit Credit 1 June 30, 2018 Cash 944,646 Bonds payable 870,000 Premium on bonds payable 74,646 December 31,2018 Interest expense 47,232.3 Premium on bonds payable 618 Cash 47,850 June 30, 2019 Interest expense 47,232.2 Premium on bonds payable 618 Cash 47,850 Record the issuance of the bond on June 30, 2018.Record the interest on December 31, 2018 (at the effective rate). Record the interest on June 30, 2019 (at the effective rate). Explanation 2. December 31, 2018 Interest expense (5% × $944,646) = $47,232.3 Cash (5.5% × $870,000) = $47,850 3.June 30, 2019Interest expense (5% × [$944,646 – $618]) = $47,201.4
Cash (5.5% × $870,000) = $47,850
Answer:
Midpoint formula = - 7.43
Other formula = - 4.88
Elastic PED - Decrease price to increase total revenue
Explanation:
Price elasticity of demand is the responsiveness of quantity demanded to a change in price. The midpoint formula calculation is as follows:
(Q2 - Q1) / [(Q2 + Q1/2]
(P2 - P1) / [(P2 + P1/2]
In this scenario:
Q1 = 433 (old quantity)
Q2 = 169 (new quantity)
P1 = 0.88 (old price)
P2 = 0.99 (new price)
When this is substituted into the formula, it is as follows (I shall do it one step at a time to make it easier):
(169 - 433) / [(169 + 433/2]
(0.99 - 0.88) / [(0.99 + 0.88/2]
(169 - 433) / 301
(0.99 - 0.88) / 0.935
- 264 / 301
0.11 / 0.935
- 0.877
0.118
PED =- 7.43(PED is always a negative figure because price and quantity demanded have an inverse relationship. i.e. when one falls, the other rises)
PED is elastic if it is more than 1 and elastic if it is less than 1.
In this case, 5.8 is more than 1, hence PED is elastic.
In such a case, a change in price will always lead to a higher change in quantity demanded. Therefore, it is important to decrease the price to increase total revenue.
However, a different answer can be obtained using a different PED calculation
% change in quantity demanded
% change in price
(Q2 - Q1) / Q1
(P2 - P1) / P1
(433 - 169) / 433
(0.99 - 0.88) / 0.88
0.61
0.125
PED = - 4.88
b. Depreciation Expense
c. Retained Earnings
d. Income Tax Expense.
Answer: c. Retained Earnings
Explanation:
The post-closing trial balance reflects balance sheet items that do not have a $0 balance in them when a period has ended and is prepared after the temporary accounts have been closed off. The purpose is to make sure that the debits equal the credits.
As there are no temporary accounts, all income statement items will have been closed off and moved to the Retained earnings account which will reflect the total for the income statement for the year. The only account that will be listed in the post-closing trial balance therefore will be the Retained earnings account.
Answer:
e. Affiliative selling relationship
Explanation:
In an affiliative selling relationship, the buyer needs the information related to the product which helps the buyer to buy the product. The buyer trust on the seller with a view to satisfy his expectations
This relationship fully depends upon the trust which results in the best purchasing decision.
By maintaining the trust, the seller increase its sales which helps him to achieve its sales target