Answer:
Explanation:
Accounts receivable of 320,000 debit
Allowance 600 credit
Sales total 900,000
1% estimated uncollectible:
900,000 x 1% = 9,000
The necessary adjusting entry will be for 9,000
As the calculated allowance corresponds to the sales of this period, we anticipate that 9,000 will be uncollectible in the upcoming period. It’s essential to acknowledge the entire sum now; otherwise, in a future period, we will incur bad debt expense for this previous period.
Recognizing the full amount aligns with the sales period, accommodating for any future uncollectible amounts arising from these sales
Answer and Explanation:
a. Below is the computation of the contribution margin for each segment:
(in millions)
Details Investor Advisor Services Services
Revenue from
operations $1,681 $1,660
Plus:
Depreciation $171 $154
Contribution
Margin $1,852 $1,814
2. Next, we assess the decrease in operating income
(in millions)
Details Combined services Institutional Services
Total Revenue $9,368 $4,771
Less:
Variable expense $5,702 $2,919
($2,919 + $2,783)
Contribution
margin $3,666 $1,852
Less:
Fixed costs -$325 -$171
Net earnings $3,341 $1,681
So from the previous calculations, it shows that the net operating income has decreased by
= $3,341 - $1,681
= $1,660 million
The variable costs can be calculated as
= Service revenues minus income from operations minus depreciation expense
