In its first year of operations, Angela Corp. earned $47,400 in
service revenue. Of that amount,...
In its first year of operations, Angela Corp. earned $47,400 in
service revenue. Of that amount, $7,500 was on account and the
remainder, $39,900, was collected in cash from customers.
The company incurred various expenses totalling $33,400, of which
$29,900 was paid in cash. At year end, $3,500 was still owing on
account. In addition, Angela prepaid $2,000 for insurance coverage
that covered the last half of the first year and the first half of
the second year. Angela expects...
Busby Corp. uses cash‐basis accounting for its records. During
2019, Busby collected $780,000 from its customers,...
Busby Corp. uses cash‐basis accounting for its records. During
2019, Busby collected $780,000 from its customers, made payments of
$420,000 to its suppliers for inventory, and paid $170,000 for
administrative costs. Busby wants to prepare accrual‐basis
financial statements. In gathering information for the
accrual‐basis financial statements, Busby discovered the
following:
1. Customers owed Busby $40,000 at the beginning of 2019 and
$36,000 at the end of 2019.
2. Busby owed suppliers $19,000 at the beginning of 2019 and
$28,000 at...
Balance Sheet
2016
2015
2014
Cash
50,000
45000
40,000
Accounts receivable
80,000
70000
60,000
Inventories
180,000...
Balance Sheet
2016
2015
2014
Cash
50,000
45000
40,000
Accounts receivable
80,000
70000
60,000
Inventories
180,000
145000
110,000
Plant & equipment
300,000
280000
260,000
Less accumulated depreciation
-40,000
-30000
-20,000
Total assets
570,000
510000
450,000
Accounts payable
100,000
125000
150,000
Accrued liabilities
70,000
60000
50,000
Mortgage payable
80,000
40000
60,000
Common stock
130,000
110000
90,000
Retained earnings
190,000
175000
160,000
Total liabilities and equity
570,000
510000
450,000
Income Statement
2014
2015
2016
Net Sales
680,000
600,000
640000
Cost of goods...
Star Corp., an accrual-method C corporation, incurred the
following expenses in 2018 (all
of which are...
Star Corp., an accrual-method C corporation, incurred the
following expenses in 2018 (all
of which are ordinary and neccessary unless the facts indicate
otherwise):
Office rent: $50,000
CEO compensation: $1,500,000
Salary paid to janitor: $250,000
Business meals: $60,000 (100% of the amount paid)
Client entertainment: $100,000 (100% of the amount paid)
Traffic fines: $5,000
Advertising: $70,000
Taxes & licenses (state, local & payroll): $30,000
Life insurance policy on CEO - premiums: $12,000
Average office rents in the area run $50,000-$55,000/year...
On Jan 1, 2015, Petunia Corp purchased an 70% interest in the
common stock of Sunflower...
On Jan 1, 2015, Petunia Corp purchased an 70% interest in the
common stock of Sunflower Corp. for $350,000.00 Sunflower had the
following Balance Sheet on the date of acquisition:
Sunflower Corporation
Balance Sheet
Jan 1,
2015
Assets:
Liabilities & Equity
Accounts
Receivable
$40,000.
Accounts Payable $42,297
Inventory
20,000.
Bonds
Payable
$100,000
Land
35,000
Discount on
BP
(2,297)
Buildings
250,000.
Common Stk ($10 par) $10,000
Accumulated Depreciation
(50,000)
Paid in
Capital
$90,000
Equipment
$120,000
Retained Earnings $115,000....
2. The Larson Company prepared the following income
statement using the cash basis of
accounting:
THE...
2. The Larson Company prepared the following income
statement using the cash basis of
accounting:
THE LARSON COMPANY
Income Statement, Cash Basis
Year Ended December 31, 2017
Service revenue $460,000
Expenses 220,000
Profit $240,000
Additional data:
1. Service revenue includes $40,000 collected from a customer for
whom services
were provided in 2016, and who was billed in 2016.
2. There are an additional $15,000 of expenses that were incurred
on account, for
which payment will not be made until 2018....
ABC Company operates three segments, of which two of them were
showing a loss.
Segment 1...
ABC Company operates three segments, of which two of them were
showing a loss.
Segment 1
Segment 2
Segment 3
Total
Sales……………………
$100,000
$200,000
$300,000
$600,000
Less Cost of goods sold
80,000
150,000
200,000
430,000
Gross margin………….
20,000
50,000
100,000
170,000
Less Operating expenses
30,000
70,000
70,000
170,000
Net operating income….
$(10,000)
$(20,000)
$30,000
$0
For each segment, 40% of its cost
of goods sold and operating expenses are variable expenses and the
remaining balances are fixed...
Revenue recognition – accrual basis vs. cash
basis: Ring The Bells, Inc. provides doorbell repair
services...
Revenue recognition – accrual basis vs. cash
basis: Ring The Bells, Inc. provides doorbell repair
services to customers. The accountant for Ring The Bells
noted the following events which took place during April,
2018:
On April 1st, provided services worth $1,000 to
customers. Customers paid $200 in cash on April 1st, the
remaining $800 will be collected in May.
On April 6th, received $440 in cash in advance from
customers for services which will be provided on May
13th, 2018.
On...
Company A developed
the following budgeted data:
Budgeted Sales…… 70%
of sales on account are collected...
Company A developed
the following budgeted data:
Budgeted Sales…… 70%
of sales on account are collected in the month of sale, 15% of
sales on account are collected in the first month following the
sale, 10% of sales on account are collected in the second month
following the sale.
Total budgeted sales
in June
($40,000 of total
sales are sales on account) $80,000
Total budgeted sales
in July
($40,000 of total
sales are sales on account) $95,000
Total budgeted sales...