On October 1, a client pays a company the full $12,000 balance of a year-long contract. Using the accrual method, what's the unearned revenue as of December 31

Answers

Answer 1
Answer:

Using the accrual method, the unearned revenue as of December 31 is $12,000.

What is Unearned revenue?

Unearned revenue can be defined as the amount a company received from their client for the service they are yet to rendered.

Since the company has received full balance for the services not yet provided. The unearned revenue as of December 31 will be $12,000 .

Reason been that the amount that the client paid the company is for a year-long contract, hence the $12,000 represent a prepayment amount for the service the company is yet to rendered to their client

Inconclusion using the accrual method, the unearned revenue as of December 31 is $12,000.

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Answer 2
Answer:

The $12,000 payment is for a one-year contract, however, we will only record revenue from October 1 up to December 31 which are the months that already lapsed. The remaining nine months are still considered unearned revenue. Thus, the remaining unearned revenue is $9,000.

Unearned revenue is the amount received from a client for a service that has yet to be rendered. Since the company has received the full balance over the services not yet provided. As of December 31, the unearned revenue will be $12,000.

Because the client paid the company for a year-long contract, the $12,000 represents a prepayment for the service the company has yet to render to their client. Using the accrual method, the revenue that is not earned as of December 31 is $9000.

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Answers

Answer:

b. raise the quantity demanded of goods and services, but lower the quantity supplied.

Explanation:

The law of demand shows an inverse relationship between price and quantity demanded. It states that if the price of goods and services decreases, the demand will increase. This is because a lower price increasing the purchasing power of buyers. On the other hand, the law of supply states shows that price and quantity supplied will move in the same direction; it states that if the price of goods and services decrease, the quantity supplied will also decrease.

A Swiss watch company advertises its history of superior craftsmanship. The company thinks that this would​ a. ​Make the demand for the product less elastic b. ​Make the customers less sensitive to the price c. ​Assist them with differentiating their product d. ​All of the above

Answers

Answer:

The correct answer is letter "B": ​Make the customers less sensitive to the price.

Explanation:

There are several reasons that could make products become elastic or inelastic. Reputation typically makes goods and services be considered inelastic. These types of products do not see a change in their quantity demanded in front of changes in price.

Thus, if a Swiss watch company promotes their history of superior craftsmanship is attempting to aware consumers about its watch quality and reputation so if they decide to increase prices consumers will be less sensitive to the change.

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Answer:

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Answers

Answer:

B) salesmen have granted customers an extension of credit terms.

Explanation:

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A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improvements. Now refer to the Income Statement in Chester's Annual Report. The direct labor costs for Chester were $32,680. These labor costs could have been $20,000 higher if investments in training that increased productivity had not been made. What was the productivity index for Chester that led to such savings?

Answers

Answer: 161.1%

Explanation:

Given that,

Direct labor costs for Chester = $32,680

Labor costs could have been $20,000 higher

Productivity index shows the ratio between the labor costs with improvements and labor costs without improvement in production.

Productivity Index = (Labor\ cost\ without\ improvement)/(Labor\ cost\ with\ improvement)*100

                              = (32,680+20,000)/(32,680)*100

                              = 161.1%

Final answer:

The productivity index for Chester, which measures the savings in labor costs due to productivity improvements, is approximately 62.06%. This suggests that, without the investments in training, Chester's labor costs would have been about 38% higher.

Explanation:

In order to calculate the productivity index for Chester, we need to understand that the productivity index essentially measures the savings in labor costs resulting from production improvements, expressed as a percentage. In this particular case, Chester was able to save $20,000 in labor costs due to investments in productivity-enhancing training.

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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.

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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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Apply What You’ve Learned - Managing Credit Cards and ConsumerLoansScenario: You are 30 years old, married, have two children, and household income (take-home pay) of$3,500 per month. Your credit and consumer debt is as follows:_______.• Car loan, 6% interest rate, $10,000 balance, $295 per month• Department store card, 28% interest rate, $600 balance, minimum payment 5% of balance• Discover Card, 12% interest rate, $2,000 balance, minimum payment 2% of balance• VISA Card, 13% interest rate, $3,000 balance, minimum payment 2% of balance• MasterCard 1, 14% interest rate, $4,000 balance, minimum payment 2% of balance• MasterCard 2, 14% interest rate, $0 balance, minimum payment 2% of balance• Gasoline card, 21% interest rate, $300 balance, minimum payment 5% of balanceAssume all credit cards will assess a $35 late fee and ongoing penalty interest of 8% above the currentrate if you miss a payment. Your recent VISA card statement came with a blank cash advance check(for up to $10,000) with terms of 23.99% APR and a fee of 3% if you use it. Your recent MasterCard 2statement came with a balance transfer oFer (up to $4,000) with no fee and 0% APR for 12 months,after which the normal interest rate applies. You recently found an incorrect amount charged on yourVISA card from a store you frequent often. You’d like to come up with a plan to eliminate all of yourcredit card debt.In general, is it a good idea to make only minimum payments on your credit cards?Yes, you can invest the money saved each month to earn interest.No, it will cause your interest rate to go up.No, the small payment requirement is mathematically guaranteed to keep you in debt for manyyears.Yes, this allows you more ±exibility in your cash budget.Assuming you have $1,500 in your budget this month with which to pay down your credit cards, howmuch should you pay on each card?CardInterestrateOutstandingRequired minimumRecommendedbalancepayment(%)payment($)debtrepaymentamountstore cardDiscover Card12%2,0008%VISA Card13%3,00010%MasterCard 114%4,0008%MasterCard 214%010%Gasoline card21%30015%Total$9,900$1,500