Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter dollar amounts. (Note that "Not Affected" means that the event does not affect that element of the financial statements or the event causes an increase in that element that is offset by a decrease in the same element.)Increase = IDecrease = DNot Affected = NACole Company uses the direct write-off method. The company wrote off an uncollectible account in the amount of $4,000. The write-off is immaterial in amount.AssetsLiabilitiesStk. EquityRevenuesExpensesNet IncomeStmt of Cash Flows???????
What will be an ideal response?
(D) (NA) (D) (NA) (I) (D) (NA)
When a company uses the direct write-off method, a write-off decreases assets (accounts receivable) and stockholders' equity (retained earnings). It increases expenses (uncollectible accounts expense), which decreases net income. It does not affect the statement of cash flows.
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What will be an ideal response?
Memphis Co is going to purchase a machine for $83,200 that will increase cash flows by $40,000 in the first year, $30,000 the second year, and $25,000 the third year. The machine will have no residual value. The minimum rate of return is 10 percent. The present value factors for the three years are 0.909, 0.826, and 0.751, respectively. The machine's net present value is
a. $21,800. b. ($3,285). c. $79,915. d. ($4,286).
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Indicate whether the statement is true or false
Use ________________ following interpretive captions
a. detailed graphics b. familiar examples c. citations d. periods