Difference between the amount deafening racket

Assignment Help Financial Accounting

Reference no: EM131207983

Mark is also concerned that his accounts receivable have become a significant proportion of his assets. Prior to expanding his business operations Mark had been owed no more than a few hundred dollars. At present his accounts receivable figure totals $13,200 and this will increase to $28,600 once Mark goes ahead with the purchase of the studio “Deafening Racket” he had been investigating. Mark has been able to ascertain that “Deafening Racket’s” current accounts receivable stands at $15,400 but that their fair value is only $10,000. Required 1. Explain to Mark why there is a difference between the amount “Deafening Racket” has their accounts receivable recorded at and the fair value of that asset. The clarify for Mark the reasons why the historic cost is used when recording the purchase of accounts receivable and the impact the fair value will have on that entry.

Reference no: EM131207983

Questions Cloud

Compute materials price and quantity variances for the month : Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5.6 pounds $ 3..

Uses perpetual inventory system : Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred. Sept. 6 Purchased calculators from Dragoo Co. at a total c..

The amount of total equity on balance sheet : Packard Company engaged in the following transactions during 2015, its first year in operations: (Assume all transactions are cash transactions.) 1) Acquired $1,550 cash from the issue of common stock. 2) Borrowed $1,020 from a bank. The amount of to..

Affect the stockholders equity section you have prepared : Twin Towns,Inc., was authorized to issue 300,000 shares of common stock and oringinally issued 100,000 shares of $10 par value stock at $18 per share. Subsequently, 25,000 shares were repurchased at $20, of which 10,000 were subsequently resold at $2..

Difference between the amount deafening racket : Mark is also concerned that his accounts receivable have become a significant proportion of his assets. Prior to expanding his business operations Mark had been owed no more than a few hundred dollars. Explain to Mark why there is a difference betwee..

Prepare the journal entry to record this transaction : On January 1, 2014, Field Furniture Co. borrowed $4,229,000 (face value) from Gary Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Field Furniture agreed to sell furniture..

Uses straight-line depreciation-cost of assets : Cost of Assets, Subsequent Book Values, and Balance Sheet Presentation The following events took place at Pete's Painting Company during 2014: On January 1, Pete bought a used truck for $14,000. He added a tool chest and side racks for ladders for $5..

Specified price during specified period of time : Stock options: (A) provide the holder with the option to purchase stock at a specified price during a specified period of time. (B) Are stock dividends in which additional shares equal to more than 20 to 25%. (C) Of the shares outstanding are issued...

Predetermined overhead rate on variable manufacturing : Oldham Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $4.00 per machine-hour and fixed manufacturing overhead cost of $87,822 per period. If the denominator level of activity is 4,100 machine-hours, the f..

User Account

All Pages