Revenue and Cash Receipts Journals

Lasting Summer Inc. has $2,360 in the October 1 balance of the accounts receivable account consisting of $1,090 from Champion Co. and $1,270 from Wayfarer Co. Transactions related to revenue and cash receipts completed by Lasting Summer Inc. during the month of October 20Y5 are as follows:

a. Prepare a single-column revenue journal to record these transactions. Enter transactions in chronological order.

Prepare a cash receipts journal to record these transactions.

If an amount box does not require an entry, leave it blank.

b. Prepare a listing of the accounts receivable customer balances and verify that the total of the accounts receivable customer balances equals the balance of the accounts receivable controlling account on October 31, 20Y5.

c. Lasting Summer Inc. uses a subsidiary ledger for accounts receivable for all of the following reasons EXCEPT:

1. The following data relate to Bebe Ltd, a manufacturing company.

Revenue for the year Sh.1,500,000

Costs as percentages of sales %

Direct materials 30%

Direct labour 25%

Variable overheads 10%

Fixed overheads 15%

Selling and distribution 5%

On average:

(a) Accounts receivable take 2.5 months before payment.

(b) Raw materials are in inventory for three months.

(c) Work in progress represents two months' worth of half produced goods.

(d) Finished goods represents one month's production.

(e) Credit is taken as follows:

(i) Direct materials 2 months

(ii) Direct labour 1 week

(iii) Variable overheads 1 month

(iv) Fixed overheads 1 month

(v) Selling and distribution 0.5 months

Work in progress and finished goods are valued at material, labour and variable expense cost.

Required

Compute the working capital requirement of Corn Co assuming the labour force is paid for 50 working weeks a year

The following represents the financial information for Domingo Corporation for two months.

Required:

a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs.

b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April.

EX 12-3 Minor differences in the terms of a contribution may justify major differences in revenue recognition.

Upon meeting with the executive director of the Crime Victims Advocacy Group, the president of a private foundation agreed to contribute in the following year $100,000 in support of the group’s proposed program to provide legal assistance to victims of violent crimes. Suppose that the foundation’s formal letter describing its pledge was worded in three different ways:

“We are pleased to pledge $100,000 in support of your group’s efforts to assist victims of violent crimes.”

“We are pleased to pledge $100,000 in support of your group’s efforts to develop a new program to provide legal assistance to victims of violent crimes.”

“We are pleased to pledge $100,000 upon your developing a new program to provide legal assistance to victims of violent crimes.”

For each of the three options:

a. Prepare the journal entries that should be made on receipt of the letter from the foundation. Assume that it was unlikely that the pledge would be fulfilled in the same period as it was made.

b. Prepare the journal entries that should be made to record the expenditure of $100,000 on activities related to the legal assistance program.

c. Prepare the journal entries that should be made on receipt of the $100,000 check, assuming that it was received shortly after the legal assistance program was established and the group spent the $100,000 on program related activities.

d. Comment on why minor differences in wording might justify major differences in accounting.

Be sure to indicate the type of fund in which your entries would be made.

Develop a cash budget based on the following information about a preschool:

Revenue
Tuition fee: $100,000 paid monthly
Event income: $50,000 by Thanksgiving
Foundation support: $200,000 semiannually, May and November

Expense
Salary and wages: $80,000 monthly
Rent and insurance: $100,000 in January
Supply and food: $10,000 monthly
Administration and fundraising: $10,000 monthly

Assume the board of directors does not allow for short-term borrowing and that the cash safety margin is $80,000. How much operating reserve or liquidity should the school have to embark on the preschool program?

Which attribute would one look at to determine a stock's fundamental value?

Competitors

Revenue and profit margin

Company management

All of the above

Which "red flag" could deter a stock purchase?

Company earnings are average and cash flow is weak

A company has announced, but not delivered an innovative product

A company has a little competition in a small market

A company has top-rated management

What should determine an actual profit?

Extraordinary events

Net income

Total operating results and consistent net income

Material losses verses revenue

Which factor determines a company's long-term viability?

Concentrating sales on a small customer base

Selling everything on company credit

Developing products slowly

Ensuring excellent cash flow

"Revenue Cycle" Please respond to the following: From the e-Activity, examine the steps necessary to complete a sale and discuss how the sales order process is integrated with other processes (credit and collections, delivery, etc.). Indicate your overall satisfaction with the process. From the e-Activity, recommend at least one improvement in the Website’s sales order process you would implement to make it more efficient in order to improve the customer experience. Then, assess whether the recommendation meant to benefits the clients warrants the potential cost of implementation for the company. Provide specific examples to support your response.

There are five revenue recognition? criteria.

1.Identify the contract with the customer.

2.Identify the performance obligations.

3.Determine the transaction price.

4.Allocate the transaction price to performance obligations.

5.Recognize revenue in accordance with performance.

There are some situations.a.
a.An apartment owner receives a deposit of? $1200 equal to one? month's rent.
b.An insurance company receives annual premiums for fire insurance on June 25 for coverage beginning July 1.
c.A city transit authority issues? 200,000 monthly passes at? $80 each for sale at various retailers. Retailers act as consignees for these passes.
d.A city transit authority sells? 50,000 monthly passes at? $80 each to transit riders at its own retail? offices/stores.e.
e.A provincial lottery corporation delivers 10 million? scratch-and-win cards to retailers. The cards retail for? $2 and generate a commission of? $0.20 per card for the retailer. The retailer can return unsold cards to the lottery corporation.

Just  identify which revenue recognition? criterion/criteria is/are NOT met at the point of? sale, preventing the recognition of revenue at that time

Common-Sized Income Statement

Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill’s data are expressed in dollars. The electronics industry averages are expressed in percentages.

a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The company is managing the cost of manufacturing product than the industry, and has slightly selling and administrative expenses relative to the industry. The combined impact causes net income as a percent of sales to be than the industry average.

What are the two basic methods used by airlines to calculate earned revenue? Briefly describe each. Cite a section of the FASB ASC to support your answer.