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.
Other things the same, a fall in an economy's overall level of prices tends to a. raise both the quantity demanded and supplied of goods and services. b. raise the quantity demanded of goods and services, but lower the quantity supplied. c. lower the quantity demanded of goods and services, but raise the quantity supplied. d. lower both the quantity demanded and the quantity supplied of goods and services.
b. raise the quantity demanded of goods and services, but lower the quantity supplied.
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
The correct answer is letter "B": Make the customers less sensitive to the price.
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.
The returns on the Bledsoe Small-Cap Fund are the most volatile of all the mutual funds offered in the 401(k) plan. Why would you ever want to invest in this fund? When you examine the expenses of the mutual funds, you will notice that this fund also has the highest expenses. Does this affect your decision to invest in this fund?
The yields are perhaps the most unpredictable for the small cap fund since the securities in this account are the most risky. It does not mean that the fund is awful, only that the danger is greater, and thus the overall return is greater.If you are prepared to accept the extra risk in expectancy of a greater return, you should like to put money in this fund. The increased costs for this Fund will be anticipated.Small cap funds typically have higher spending due largely to greater operating costs, along with lower resource analysis.
Toys "R" Us has decreased its receivable turnover over the last three years: which of the following may be a possible cause of this decrease? A) the company has been more selective in choosing reliable customers. B) salesmen have granted customers an extension of credit terms. C) the accounting department has increased the allowance for doubtful accounts. D) all of the above are correct
B) salesmen have granted customers an extension of credit terms.
receivables turnover ratio = net sales / average accounts receivable
A low receivables turnover ratio is usually a bad thing, since most companies sell on credit, i.e. their accounts receivable should be important. A high receivables turnover ratio means that the company is collecting its accounts receivable efficiently and its customers are good payers.
The key point here is average accounts receivable. What can result in a company having very high accounts receivable (compared to its total sales)? The answer is simple, their customers are not paying on time or the company had to extend their credit terms in order to attract more customers.
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?
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 =
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.
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.
The original direct labor costs for Chester was $32,680. Had Chester not made any productivity improvements, the labor costs would have been $32,680 plus an additional $20,000, for a total of $52,680. Therefore, the productivity index is calculated by dividing the original labor cost by what the labor cost would have been without the productivity improvements, and multiplying by 100, as follows: ($32,680 / $52,680) * 100. This equation gives a productivity index of approximately 62.06%. This means that Chester's labor costs would have been approximately 38% higher without the productivity improvements.
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.
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: