1.Merchandising businesses generate revenue by selling goods. include wholesale and retail companies. manufacture the goods that they sell. generate revenue by selling goods and include wholesale and retail companies.
2. A retail company sells goods primarily to other businesses. manufacturing firms. the final consumer. other businesses and the final consumer.
3.Merchandising businesses manufacture the goods they sell. generate revenue primarily by providing services to customers. buy the merchandise they sell from suppliers. include dry cleaning companies and law firms.
4.A discount given to encourage prompt payment on a credit purchase of merchandise is called: a cash discount. a sales discount by the seller. a purchase discount by the buyer. all of these are correct.
5. On January 1, 2014 Morgan Co. purchased a truck that cost $32,000. The truck had an expected useful life of 10 years and a $5,000 salvage value. The amount of depreciation expense recognized in 2015 assuming that Morgan uses the double declining-balance method is: $4,320. $5,120. $5,400. $6,400.
In: Accounting
Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. 23. Prepare the required journal entry for Romano Services on April 30th. The entry includes: a. A debit to accounts receivable of $46,500 b. A debit to bonus receivable of $1,500 c. A credit to service revenue of $51,000 d. A credit to bonus receivable of $3,000 e. A debit to bonus receivable of $4,500 f. A debit to bonus receivable of $6,000 g. A credit to deferred revenue of $93,000 h. None of the above 24. Prepare the required journal entry for Romano Services on May 30th. The entry includes: a. A debit to accounts receivable of $45,800 b. A debit to bonus receivable of $1,500 c. A debit to bonus receivable of $800 d. A credit to service revenue of $15,400 e. A credit to bonus receivable of $100 f. A debit to bonus receivable of $100 g. A credit to deferred revenue of $45,800 h. None of the above 25. Prepare the required journal entry for Romano Services on June 30th. The entry includes: a. A debit to bonus receivable of $4,400 b. A debit to accounts receivable of $46,600 c. A debit to bonus receivable of $800 d. A credit to service revenue of $51,000 e. A credit to bonus receivable of $1,600 f. A debit to bonus receivable of $800 g. A credit to deferred revenue of $138,800 h. None of the above Romano Services provides room-cleaning arrangements for hotels. On April 1, Swanky Hotels & Resorts signed an agreement to outsource its room cleaning functions to Romano. The contract specifies the service fee to be $45,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Romano will receive an additional quarterly bonus of $6,000, if during that quarter, Swanky receives no more than five complaints from customers about room cleanliness. • On April 1, based on historical experience, Romano estimated that there is a 75% chance that it will earn the quarterly bonus. • On May 5, Romano learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Romano revised its estimate downward to 40% that it would earn the quarterly bonus. • On June 30, Swanky notified Romano that, for the quarter ended, there were four complaints associated with room cleanliness, so Romano would receive the bonus. Two days later, Romano received all payments due for all services rendered in the second quarter, including the bonus Romano estimates any variable consideration on the expected value of the consideration it expects to receive. Prepare the required journal entry for Romano Services on April 30th, May 30th, June 30th
In: Accounting
Florist Blossom Sdn Bhd (FB) has been in the flower and gift business for several years. The recent Covid-19 pandemic has affected the business quite severely in the year 2020. In December 2020, the company changed its full operation to online deliveries of fresh and artificial flowers, and gifts and started a membership program for its customers. Since then, the business performance improves gradually as many customers turn to online orderings and they get 20% discounted prices for their chosen special celebrations when customers signed up for the membership which costs around RM20. The membership lasts every two years, for which they can renew for the same cost.
FB sells flowers and gifts by cash through online transfer. The company has planned to allow the use of debit and credit cards but it will be implemented when sales reached RM2,000,000 per year. As of now, the company’s revenue stands at around RM100,000 to RM150,000 per month where RM30,000 to RM50,000 are coming from the sales of membership.
Once products are ordered and paid online by customers, the company immediately recognises the sales although the orders have not been delivered. The sales recognition includes the full price paid for the 2-year membership. FB’s auditor, Mr Insta, has discovered the following when discussing with the Chief Executive Officer (CEO) of FB, Miss Tweety:
• It is the company’s policy to deliver the orders within 5 working days. Sales orders of fresh flowers cannot be refunded. Only sales orders of artificial flowers and gifts can be returned subject to a 5% penalty within 5 days, and a 15% penalty within 10 days. After 10 days, customers are not allowed to make sales returns.
• The customer orders are managed by Mrs Famy who receives the orders, records the sales and cash receipts and delivers the goods. No staff is specially allocated to handle sales returns.
• Since January 2021, the company has increased its membership tremendously. Membership of customers can be revoked on a yearly basis, but none during the first year. Based on estimation, only 10% of customers revoke their membership after one year.
Required:
I) Identify three (3) risky areas or accounts in the above case and state one (1) related management assertion for each area.
II) For each of the risky areas in (i) above, describe one (1) internal control activity that must be performed to overcome the weakness.
III) For each of the risky areas in (i) above, suggest one (1) test of controls and one (1) substantive test of transactions or details to be done on the accounts related to the sales and cash receipts system of FB Sdn Bhd.
IV) For any two (2) of the risky areas in (i) above, suggest one (1) substantive analytical procedure to be done on the accounts related to the sales and cash receipts system of FB Sdn Bhd.
In: Accounting
We have 3,000 Units of product to sell over a five day period. From historical sales data, we have estimated the following demand curves
P=price/unit in $
Q=number of units sold
Day 1: P=10-0.01Q valid for prices between $3and $8.
Day 2: same as Day 1
Day 3: P= 15-0.01Q valid for prices between $6 and $10
Day 4 P=20-0.01Q valid for prices between $6 and $12
Day 5: same as Day 1
1. The revenue maximizing price for day 3 is______ and quantity sold is _______.
2. The revenue maximizing price for day 4 is ______ and quantity sold is _______.
Expert Answer
In: Economics
1. Rebates and discounts
On March 1, Martin Company sold and delivered goods to Shannon Inc. for $300,000 on account. Shannon Company has been a customer for more than 10 years and has earned a 3% rebate on the overall purchase. Prepare the journal entry to recognize revenue. The journal entry for the cost of goods sold is not required.
2. Commissions, consignee/agent perspective
Royal vacations, a high-end vacation agent, sells tickets for all-inclusive European vacations to various customers. The company sells a $10,000 package and will receive a commission of 4% of the total price. Royal vacations must also remit the sales price to European Destinations, Company. Prepare the journal entry to record the receipt of cash and remittance and revenue recognized the agent.
In: Accounting
P18.8 (LO 2, 3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company.
Instructions
Respond to the requirements related to each revenue
arrangement.
Colbert sells 20 nonrefundable $100 gift cards for 3D printer paper on March 1, 2020. The paper has a standalone selling price of $100 (cost $80). The gift cards expiration date is June 30, 2020. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.
Redemption Total
March 31
50%
April 30
80%
June 30
85%
Prepare the 2020 journal entries related to the gift cards at March
1, March 31, April 30, and June 30.
In: Accounting
The following example pertains to Bluefield Company for 2005.
Cash received from customers during 2005$140,000
Cash received from tenants during 2005 56,000
Cash paid for salaries during 2005 43,000
Cash paid for income taxes during 2005 23,000
Cash paid to suppliers during 2005 78,000
Jan. 1Dec. 31
Accounts receivable$5,000$9,000
Accounts payable11,000 7,000
Income tax payable 7,000 3,000
Inventory14,00020,000
Prepaid salaries 4,000 2,000
Unearned rent revenue 1,000 6,000
Instructions
Compute the amount of each of the following items for 2005 on the accrual basis.
1. Sales
2. Rent revenue
3. Salaries expense
4. Income tax expense
5. Cost of goods sold
In: Accounting
True/False
- The quick ratio is a measure of sales performace.(T/F)
- It is best to reduce cash holdings when attempting to increase the valuation of a company. (T/F)
- A repeat customer usually deserves credit terms considerations. (T/F)
- International customers usually are more reliable payers and should receive better credit terms. (T/F)
- The credit decision can assist in increasing sales revenue. (T/F)
- Reducing DPO is a source of cash for a company. (T/F)
- CCE(cash conversion effectiveness) measures the effectiveness of turning sales revenue into cash.(T/F)
- JIT has proven to be ineffective in most industries. (T/F)
- A new cash cycle begins when the cash is received from a customer's payment. (T/F)
In: Finance
Short essay question:
Using your readings, including "Drug Goes From $13.50 a Tablet to $750, Overnight,”:
a. How would you describe the price elasticity of demand for Daraprim? What barrier to entry into the Daraprim market does Turing Pharm use to maintain its monopoly market position and keep other firms from entering into the Daraprim market?
b. For practically any other business that chooses to raise its price by 50 times, the business would surely lose most if not all of its customers. Why is Turing still in business? (Elasticity of demand for Daraprim and total revenue relationship is key here.)
c. Describe how the elasticity of Daraprim would change if there were generic versions of the drug offered by other companies and how would total revenue be affected accordingly?
In: Economics
The average weight of American adults increased by about 10 pounds in the 1990s. In November of 2004, it was reported that U.S. airlines spent $275 million more in fuel costs to transport this additional weight. Under what circumstances would this increased cost be an externality of obesity, and under what circumstances would it not be an externality?
In: Economics