1. Consider the following revenue and cost data for Shannon’s Brewery in Keller, Texas. Shannon’s sells 35% of its craft beer production through its own on-premise taproom. The bulk of its sales (65%) are made off-premise via various retail outlets including supermarkets, bars, and restaurants. 40% of its of sales (on-premise and off-premise) consists of package sales (bottles and cans). Of this 40%, beer sold in cans accounts for 80% with sales of bottled beer accounting for the remaining 20%. Finally, the bulk of Shannon’s craft beer sales (60%) occurs in kegs (31 gallons per keg). Assume that overall sales for FY 2018 are expected to be $1351261. Given the proportions of beer sold in kegs, bottles, and cans, what will be the predicted dollar sales of beer sold in kegs? Round your answer to the nearest one dollar.

2. Assume the following costs in each of the categories identified in question one are:

What is Shannon's cost of goods sold?

3. Assume that projected revenue for 2018 is 1363442. Also assume the following projected 2018 costs in each of the cost categories from question one:

Given these costs, compute Shannon’s projected contribution margin in dollars.

4. Assume that total sales revenue for 2018 is projected to be $1270127. Assume also the following costs for Shannon’s Brewery:

Compute Shannon’s %NMC. Round your answer to the nearest percent. For example, if your computed answer is 99.4% your answer rounds down to 99%. If your computed answer is 99.5% you should round up to 100%. DO NOT INCLUDE THE % SIGN IN YOUR ANSWER.

evenue and cash receipts journals; accounts receivable subsidiary and general ledgers

Transactions related to revenue and cash receipts completed by Crowne Business Services Co. during the period April 2–30 are as follows:

Required:

1. Insert the following balances in the general ledger as of April 1:

After completing the recording of the transactions in the journals in part 3, total each of the columns of the special journals, and post the individual entries and totals to the general ledger. Insert account balances after the last posting. When posting to the general ledger, post in chronological order. However, if there is more than one entry on the same date, be sure to post transactions from the revenue journal before posting transactions from the cash receipts journal.

If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

2. Insert the following balances in the accounts receivable subsidiary ledger as of April 1:

After completing the recording of the transactions in the journals in part 3, post to the accounts receivable subsidiary ledger in chronological order, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer's account before recording a cash receipt. If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees.

4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for April. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer’s account before recording a cash receipt.

5. Total each of the columns of the special journals and post the individual entries and totals to the general ledger. Insert account balances after the last posting.

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

6. What is the sum of the customer balances?
$

Does the sum of the customer balances agree with the accounts receivable controlling account in the general ledger?
  

7. Would an automated system omit postings to a controlling account as performed in step 5 for Accounts Receivable?

For each of the following independent situations, answer the specific revenue concerns (provide authoritative support where appropriate). Use new revenue recognition, ASC 606.

1)        Company A enters into a contract on February 1, 2018 to manage rental property for Company B for the next 5 years. Company A will provide all services related to the management of the property and will receive a monthly payment equal to 2% of the gross rentals from the property. Historically, property of this type in this area has averaged an 85% occupancy rate. How should Company A determine the amount and timing of revenue recognition under this contract?

2)        Company A is constructing a high-rise luxury apartment building. The building will contain 80 apartments of similar size and layout. During 2018, Company A receives a deposit of $100,000 from a customer for one of the apartments. The deposit is only refundable if Company A fails to complete the building. Company A expects completion early in 2019. The remainder of the apartment’s sale price ($900,000) is due from the customer at the completion of the building when the customer can take possession. Can Company A recognize revenue in 2018 related to the contract with the customer paying the deposit?

3)        Bakery A has an incentive plan that gives its customers one point for each doughnut purchased. A customer that has accumulated 15 points can receive a free doughnut. During the current year, Bakery A sold 201,600 doughnuts at $1.20 each. Bakery A expects 90% of the points to be redeemed and 10,500 were redeemed in the current year. How much revenue should Bakery A recognize in the current year related to the sale of the doughnuts and the incentive plan?

Identify each of the following accounts of Dispatch Services Co. as asset, liability, owner's equity, revenue, or expense, and state in each case whether the normal balance is a debit or a credit:

Google generates much of its revenue by providing online advertising. It is said that: “Activity-based-costing is only useful for manufacturing companies?” Is this a true statement?

Use the following information to complete this problem:

Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively.

What amount of ordinary income will be reported on Jack's Schedule K-1?

What amount of ordinary income will be reported on Jill's Schedule K-1?

Exercise 13.3. The worksheet of Bridget’s Office Supplies contains the following revenue, cost, and expense accounts. Prepare a classified income statement for this firm for the year ended December 31, 2016. The merchandise inventory amounted to $59,775 on January 1, 2016, and $52,725 on December 31, 2016. The expense accounts numbered 611 – 617 represent selling expenses, and those numbered 631 – 646 represent general and administrative expenses.

Accounts:

            401                  Sales                                                               $248,900         Cr.

            451                  Sales Returns and Allowances                 4,350               Dr.

            491                  Miscellaneous Income                                    400                  Cr.

            501                  Purchases                                                       103,600           Dr.

            502                  Freight In                                                       1,975               Dr.

            503                  Purchases Returns and Allowances                 3,600               Cr.

            504                  Purchases Discounts                                     1,800               Cr.

            611                  Salaries Expense – Sales                                    45,300             Dr.

            614                  Store Supplies Expense                                    2,310               Dr.

            617                  Depreciation Expense – Store Equip. 1,510               Dr.

            631                  Rent Expense                                                 13,500             Dr.

            634                  Utilities Expense                                            3,000               Dr.

            637                  Salaries Expense – Office                                    21,100             Dr.

            640                  Payroll Taxes Expense                                    6,000               Dr.

            643                  Depreciation Expense – Office Equip. 570                  Dr.

            646                  Uncollectible Accounts Expense                      720                  Dr.

            691                  Interest Expense                                            740                  Dr.

1) Deferred revenue occurs when cash is received from a customer before work or the sale is completed.
True
False

2) In accrual accounting, revenue may be earned prior to or after cash is received.
True
False

3)An expense incurred in 2016 is not paid until 2017. Using the accrual basis of accounting, the expense should appear on:

A.both the 2016 and 2017 income statements

B.the 2016 income statement

C.neither the 2016 nor 2017 income statement

D.the 2017 income statement

4) On December 1, 2017, Cream Ale Ltd. receives $1,800 in advance for an agreement to brew beer during the months of December, January, and February. As of December 31, 2017, Cream Ale Ltd:

A)would have recognized $600 cash under accrual accounting, and would have recognized 1,800 cash under cash −basis accounting

B.would have a $0 liability to its client under accrual accounting, and would have a $1,200 liability to its client under cash−basis accounting

C.would have recognized $600 revenue under accrual accounting, and would have recognized $1,800 revenue under cash−basis accounting

D. would have a $1,200 liability to its client under accrual accounting, and would have a $1,800 liability to its client under cash−basis accounting


5)A deferral refers to an​ event:

A.where the recognition of an expense or revenue is recorded after the cash is paid or received

B.where the recognition of an expense or revenue is recorded before the cash is paid or received

C.where the liability for an expense is recorded after the expense is actually incurred

D.where the liability for an expense is recorded before the expense is actually incurred


6) Retained earnings for the beginning of a period appears on the statement of retained earnings while the ending balance of retained earnings appears on the statement of retained earnings and the balance sheet.
True
False

Vertical Analysis of Income Statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The vertical analysis indicates that the cost of goods sold as a percent of sales   by 6 percentage points, while selling expenses   by 3 percentage points, and administrative expenses   by 1 percentage points. Thus, net income as a percent of sales   by 3 percentage points.

Vertical Analysis of Income Statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The vertical analysis indicates that the cost of goods sold as a percent of sales   by 6 percentage points, while selling expenses   by 3 percentage points, and administrative expenses   by 1 percentage points. Thus, net income as a percent of sales   by 3 percentage points.