Question

Presented below is information for Metlock Company.

1. Beginning-of-the-year Accounts Receivable balance was $21,400.
2. Net sales (all on account) for the year were $105,300. Metlock does not offer cash discounts.
3. Collections on accounts receivable during the year were $81,300.
Prepare (summary) journal entries to record the items noted above.

Answer 1

To calculate the firm's accounting profit, subtract the total explicit costs from the total revenue. In this case, the accounting profit is $50,000.

Step-by-step explanation:

To calculate the firm's accounting profit, we need to subtract the total explicit costs from the total revenue. In this case, the total explicit costs are the sum of labor ($600,000), capital ($150,000), and materials ($200,000), which equals $950,000. Therefore, the accounting profit would be $1,000,000 - $950,000 = $50,000.