Answer:
a. HORIZONTAL METHOD
INCOME STATEMENT
Date Income $ - Expenses $ = Net Income
1 Nov - - - - -
b. adjustment
31 for each rent 5,300 - - 5,300
Month
c. BALANCE SHEET AS OF 31 DEC
Assets = Equity + Liabilities
+ bank $84,800 - prepaid expenses +$84,800
Explanation:
At the point of 1 Nov, there were no transactions recorded in the income statement since the revenue has yet to be realized; only the balance sheet shows + bank $31800 and + income received in advance (a liability) $31800
Each month's rent amounts to $31800/ 6 months =$5300
18 months rent totals to 95400
The unearned amount by December would then equal: 18 months - 2 months earned
= 95400- 10600
=$84,800
Answer:
0.45
Explanation:
Total asset turnover indicates the ratio of total assets to total revenue. It evaluates how effectively a company is employing its assets to generate sales.
The calculation is performed as follows: Net Sales / Average Total Assets.
Average total assets are determined by: (Asset at Start + Asset at End) / 2.
Using the given data:
Total revenue = $900,000 and total assets = $2,000,000.
$900,000/$2,000,000 = 0.45.
Note: Since the beginning and ending assets are not specified, we assume $2,000,000 represents the average assets.
To answer, "b. offer rebates and incentives for customers who purchase washing machines." Increasing a company's productivity must be strategically planned, ensuring there is demand in line with economic expectations. If a firm expands its capacity without sufficient demand, the outcome can be detrimental, especially during economic downturns. The described firm faces idle capacity and, thus, it is prudent to provide price incentives like discounts to encourage demand for washing machines, allowing the business to maintain operations until the economy rebounds.
