A Company Decides to Close Down Its Plastics Division

question 58

Multiple Choice

A company decides to close down its plastics division.It has on hand 20 tons of styrene monomer,a raw material that has a market price of $700 per ton,which had been originally purchased at $650 per ton.Given that the company has no use for the styrene monomer,and that it would cost the company $5000 to store it,what is the value of the 20 tons of styrene monomer to the company?

• A)-$5000
• B)$0
• C)$13,000
• D)$14,000
• E)$19,000

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Definitions:

Allowance Method

An accounting technique used to estimate and account for doubtful accounts receivable.

Bad Debts

Accounts receivable that are considered uncollectible, representing a loss to the company.

Sales Tax Rate

The percentage of sales price that businesses must collect from customers and remit to governmental agencies as sales tax.

QuickBooks Lists

Features within QuickBooks software that organize data into manageable categories like vendors, customers, and inventory items for easy access and management.