Using the Form Below, Record Each of the Following Year

question 97

Essay

Using the form below, record each of the following Year 1 transactions for Mayer Corporation.a)November 1: Received cash from clients for services to be performed over the next six months, $12,000.b)November 1: Paid $1,200 for a 12-month insurance policy.c)December 31: Recorded expiration of two months of the insurance.d)December 31: Earned $4,000 of the amount received from clients in November.

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Definitions:

Arithmetic Average Return

The simple mean of a series of returns generated over a period of time.

Dollar-Weighted Return

A method of calculating an investment's return that accounts for the timing and amount of cash flows into the investment.

Arithmetic Average

The simple mean calculated by adding a set of values and then dividing by the number of values.

Geometric Average

The nth root of the product of n numbers, used to calculate average rates of return over time for investments that undergo compounding.