For the year ended 30 June 2018, Alexander Ltd recognised a liability ‘revenue received in advance’ of $18 000. This revenue was assessable in the year ended 30 June 2018.

Required

(a) What is the carrying amount of the liability on 30 June 2018?

(b) What is the tax base of the liability on 30 June 2018?

(c) If the tax rate is 30%, what would be the deferred tax asset or liability associated with this liability on 30 June 2018?

(d) How would your answers to (a), (b) and (c) above be different if the revenue was assessable in the 2018/2019 financial year?

ABC is considering two investment alternatives. Alternative A requires an initial investment
of $10,000; it will yield incomes of $3000, $3500, $4000, and $4500 over its 4-year life.
Alternative B requires an initial investment of $12,000; it is anticipated that the revenue
received each year will increase at a rate of 10%/year (each year’s revenue is 10% higher than
that of the preceding year).
Based on an interest rate of 12% compounded annually, what must be the revenue at the first
year for B in order for alternatives A and B to be equivalent? (Draw the cash flow profiles)

ABC is considering two investment alternatives. Alternative A requires an initial investment
of $10,000; it will yield incomes of $3000, $3500, $4000, and $4500 over its 4-year life.
Alternative B requires an initial investment of $12,000; it is anticipated that the revenue
received each year will increase at a rate of 10%/year (each year’s revenue is 10% higher than
that of the preceding year).
Based on an interest rate of 14% compounded annually, what must be the revenue at the first
year for B in order for alternatives A and B to be equivalent? (Draw the cash flow profiles)

56. Sweet Air Flow sells prepaid HVAC contracts. When a contract is sold, cash is debited and contract revenue is credited. As of December 31, 2020, the year end, the following information was available regarding contract sales:

Date Sold      Amount          Contract Term

August 1        $72,000          1 year

October 1      $69,600          6 months

November 1 $42,000          3 months

The unadjusted balance of unearned contract revenue has a credit balance of $10,000. This represents contracts that expired during 2020. Give the adjusting entry needed for contract revenue.

Consider the market for coffee. For each of the following scenarios, what would happen to total revenue after the price increases? Place each scenario in the correct category.

Items (5 items) (Drag and drop into the appropriate area below)

• Coffee drinkers say there is no substitute.
• Coffee drinkers decide to save their money for alcohol on Friday nights.
• Leaf rust damages one-third of the world's coffee crop.
• Brazil has a drought.
• Coffee drinkers discover a flavor of tea that tastes like coffee.

Categories

• Increase Total Revenue

• Decrease Total Revenue

• Cannot Determine

Identify the applicable accounting convention for the following business scenario and explain your choice

The Morrison Company receives much of its revenue from those customers who buy or rent furniture and appliances on the installment plan. Because the company uses an accrual-based accounting system, revenue is recognized at the point of sale, even though cash comes in on a monthly basis from customers. Lately, the company's accountant is questioning the use of the accrual basis for recognizing revenue, because several customers have defaulted on their contracts, causing problems in the accounting system.

The Red Hen company is launching its new food for sale in supermarkets throughout Michigan. The sales department is convinced that its spicy chicken soup will be a great success. The marketing department is considering an intensive advertising campaign. The advertising campaign will cost $2,000,000 and if successful produce $9,600,000 in added revenue. If the campaign is less successful (25% chance), the added revenue is estimated at only $3,600,000. If no advertising is used, the revenue is estimated at $7,000,000 with probability 0.7 if customers are receptive and $3,000,000 with probability 0.3 if they are not.

Question- Should Red Hen invest in an intensive advertising campaign?

Seminoles Corporation’s fiscal year-end is December 31, 2018. The following is a partial adjusted trial balance as of December 31.     
  

     
Required:

1. Prepare the necessary closing entries.

Record the entry to close the revenue accounts.

Record the entry to close the expense accounts.

Record the entry to close the dividends account.

2018 Fiscal Year for XYZ Hospital

Depreciation: 448,350

Insurance expense: 373,030

Interest expense: 280,450

Investment income: 270,900

Repairs/maintenance: 222,740

Patient Services revenue: 10,725,260

Rent expense: 299,250

Salaries and benefits: 6,735,610

Supplies: 1,025,625

Utilities: 227,500

Based upon your income statement, answer the following in the space provided:

b. What is the net patient revenue? _______________

c. What are the total expenses for the year? ______________

d. What is the hospital's bottom line for the year? ______________

e. What % of net patient revenue is spent on salaries and benefits? __________   

Question 7 (7 points)

During June, Bravo Magazine sold for cash six advertising spaces for $400 each to be run in the July through December issues. On that date, Bravo properly recognized Unearned Revenue. The adjusting entry to record on July 31 includes:

Question 7 options:

Question 8 (7 points)

On January 7, Bravo purchased supplies on account for $1,000, and recorded this purchase to the Supplies account. At the end of January, Bravo had $600 of these supplies still on hand. The proper adjusting journal entry at January 31 would:

Question 8 options: