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Dimas [21]
2 years ago
10

Betsy owned a speedboat that was not operating correctly. She hired Gail, a mechanic, to determine what needed to be repaired or

replaced on the boat. Gail concluded that the boat needed over $5,000 of work to run safely. Upset by the news, Betsy decided to get a second opinion from Kathy, another mechanic. Kathy advised Betsy that the boat only needed a new fuel pump, which cost considerably less than $5,000. Betsy decides to sell her boat instead of repairing it. When a prospective buyer asks Betsy whether the boat has been inspected by a mechanic, she will:_________.
Business
1 answer:
Alchen [17]2 years ago
4 0

Answer:

Betsy should simply tell the truth: that the boat was actually inspected by two mechanics, but not only it was not repaired, but both mechanics had a very different diagnosis about what was wrong with the boat.

She should also warn the buyer that the boat likely needs at least a new fuel pump, and in case the diagnostic of the first mechanic (Gail) is true, the boat then would likely need an expensive repair.

You might be interested in
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles. The snowmobiles were delivered on January 1, 2021, and Arctic rec
WITCHER [35]

Answer:

Assume the note indicates that Seneca is to pay Arctic the $39,700 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.

Dr Notes receivable 39,700

    Cr Sales revenue 36,759.26

   Cr Discount on notes receivable 2,940.74

Discount on notes receivable is a contra asset account that decreases the net amount of notes receivable.

Assume the same facts as in requirement 1, and prepare the journal entry for Arctic to record collection of the payment on December 31, 2021.

Dr Cash 39,700

    Cr Notes receivable 36,759.26

    Cr Interest revenue 2,940.74

Assume instead that Seneca is to pay Arctic the $39,700 due on the note on December 31, 2022. Prepare the journal entry for Arctic to record the sale on January 1, 2021.

Dr Notes receivable 39,700

   Cr Sales revenue 34,036.35

   Cr Discount on notes receivable 5,663.65

Discount on notes receivable is a contra asset account that decreases the net amount of notes receivable.

Assume instead that Arctic does not view the time value of money component of this arrangement to be significant, and that the note indicates that Seneca is to pay Arctic the $39,700 due on the note on December 31, 2021. Prepare the journal entry for Arctic to record the sale on January 1, 2021.

Dr Notes receivable 33,900

    Cr Sales revenue 33,900

Explanation:

Non interest bearing notes must be recorded at present value, so we need to determine the present value of the payment:

Payment due December 21, 2021, PV = $39,700 / (1 + 8%) = $36,759.26

Payment due December 21, 2022, PV = $39,700 / (1 + 8%)² = $34,036.35

We use the discount on notes receivable account (contra asset account) to decrease the net value of notes receivable.

8 0
2 years ago
On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $180 million. The bonds mat
pychu [463]

Answer:

Bond Price = $149.1136446 million rounded off to $149.11

Explanation:

To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,

Coupon Payment (C) = 180 million * 0.08 * 6/12 = 7.2 million

Total periods (n) = 20 * 2 = 40

r or YTM = 0.1 * 6/12 = 0.05 or 5%

The formula to calculate the price of the bonds today is attached.

Bond Price = 7.2 * [( 1 - (1+0.05)^-40) / 0.05]  +  180 / (1+0.05)^40

Bond Price = $149.1136446 million rounded off to $149.11

3 0
2 years ago
Shellhammer Company's inventory records show the following data for the month of September: Units Unit Cost Inventory, September
Pie

Answer:

Shellhammer Company

Ending inventory = $712

Cost of goods sold = $2,492

Explanation:

a) Data and Calculations:

Date                     Item          Units           Unit Cost     Total Cost

September 1    Inventory           100           $3.34          $334.00

September 8   Purchases        450             3.50          1,575.00

September 18 Purchases        350              3.70          1,295.00

September 30 Total                900                            $3,204.00

Ending inventory                     200

Cost of goods sold                 700

Weighted Average cost = Total cost of goods available for sale/Total units available for sale

= $3,204/900 = $3.56

Value of Ending Inventory = $3.56 * 200 = $712

Value of Cost of goods sold = $3.56 * 700 = $2,492

b) The weighted average inventory costing, under the period inventory system, used by Shellhammer is an assumption that the costs attributable to ending inventory and cost of goods sold are determined from the average cost per unit and that these the average cost is ascertained at the end of the period.  Therefore, the cost of beginning inventory and purchases are accumulated and divided by the units of goods available for sale.

4 0
2 years ago
David bought a pickup truck to transport his equipment on weekend fishing trips. He also bought a trailer for his lawn maintenan
trasher [3.6K]

Answer:

B2C and B2B, respectively.

Explanation:

The pickup that David bought to transport equipment on weekend fishing trips should be considered a business to consumer (B2C) transaction David will use it for recreational activities.

The trailer that David bought to transport his lawn maintenance equipment should be considered a business to business (B2B) transaction David will use it for his lawn maintenance business.

6 0
2 years ago
E6-18 (Algo) Inferring Bad Debt Write-Offs and Cash Collections from Customers LO6-2 On its recent financial statements, Hassell
timofeeve [1]

Answer:

  • 1. What amount of bad debts was written off during the current year?  

Allowance for Doubtful Accounts  

$ 147 Credit

$ 94 Credit

$ 58 Debit

$ 183 Credit Balance      

Dr Allowance for Uncollectible Accounts $ 58  

Cr Accounts Receivable Net $ 58  

2. Based on your answer to requirement (1), solve for cash collected from customers for the current year    

Accounts Receivable  

$ 11.785    Debit  

$ 61.170    Debit  

$ 58         Credit  

$ 58.825 Credit  

$ 14.072  Debit Balance  

Explanation:

To know the amount that was written off during the current year, it's necessary to take the balance of the prior year and add the amount recorded as bad debt during the year, with these we calculate the amounts of difference between the balance of the current year and these values, the amount it's the value written-off during the current year.          

  • Hassell recorded bad debt expense of $94 and there were no bad debt recoveries during the current year.  

Dr Bad Debt Expense                                $ 94  

Cr Allowance for Uncollectible Accounts $ 94  

1. What amount of bad debts was written off during the current year?  

Allowance for Doubtful Accounts  

$ 147 Credit

$ 94 Credit

$ 58 Debit

$ 183 Credit Balance

Dr Allowance for Uncollectible Accounts $ 58

Cr Accounts Receivable Net                 $ 58

2. Based on your answer to requirement (1), solve for cash collected from customers for the current year    

With these value calculated we can know find the total amount collected during the year, as previously done, we apply the same procedure to find the amount, we know the movements done during the current year and by difference we find the total value collected.

Accounts Receivable  

$ 11,785    Debit  

$ 61,170    Debit  

$ 58         Credit  

$ 58,825 Credit  

$ 14,072   Debit Balance  

Dr Cash                                   $ 58.825

Cr Accounts Receivable Net $ 58.825

     

5 0
2 years ago
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