Multiple-step income statement.

Shown below is revenue, expense, gain, and loss information for AAA Corporation for 2019.

Administrative expense 215,000

Cost of merchandise sold 408,500

Interest expense 13,000

Dividend revenue 19,500

Pre-tax loss on disposal of a component of the business 30,000

Loss from write-down of inventory 70,000

Sales revenue 945,000

Selling expenses 145,000

Instructions

Prepare a multiple-step income statement, in proper form for 2019 for AAA Corporation that is presented in accordance with generally accepted accounting principles (including format and terminology). AAA Corporation has 75,000 shares of common stock outstanding and has a 20% federal income tax rate on all tax related items. Round all earnings per share figures to the nearest cent.

Kingbird, Inc. compiled the following financial information as of December 31, 2017:

Kingbird stockholders’ equity on December 31, 2017 is:

$676000

$644000

$473000

$740000

Describe nested conrol limit (system of seat allocation) and state its importance to maximizing expected revenue in a stochastic demand.

Changes in Various Ratios Presented below is selected information for Turner Company:

2019 2018

Sales revenue $950,000 $850,000

Cost of goods sold 575,000 545,000

Interest expense 20,000 20,000

Income tax expense 27,000 30,000

Net income 65,000 55,000

Cash flow from operating activities 70,000 60,000

Capital expenditures 45,000 45,000

Accounts receivable (net), December 31 126,000 120,000

Inventory, December 31 196,000 160,000

Stockholders’ equity, December 31 450,000 400,000

Total assets, December 31 750,000 675,000

Required Calculate the following ratios for 2019. The 2018 results are given for comparative purposes. Round answers to one decimal place. Use 365 days in a year.

2018 2019  

1. Gross profit percentage 35.9% % blank

2. Return on assets 8.3% % blank

3. Return on sales 6.5% % blank

4. Return on common stockholders’ equity (no preferred stock was outstanding) 13.9% % blank

5. Accounts receivable turnover 8.0 blank

6. Average collection period 45.6 days blank days

7. Inventory turnover 3.6 blank

8. Times-interest-earned ratio 5.3 blank

9. Operating-cash-flow-to-capital-expenditures ratio 1.3 blank

Instructions

(a)   Journalize the transactions.

(b)   Indicate the statement presentation of interest revenue and service charges.

Exercise 3

Para Float Company often requires customers to sign promissory notes for major credit purchases. Journalize the following transactions for Para Float Company.

Feb. 12    Accepted a $30,000, 4%, 60-day note from Yancy Blair for a 24-foot motorboat built to his specifications.

April 14    Received notification from Yancy Blair that he was unable to honor his promissory note but that he expects to pay the amount owed in May.

May 26    Received a check from Yancy Blair for the total amount owed.

June 10    Received notification by the bank that Yancy Blair check was being returned "NSF" and that Mr. Blair had declared personal bankruptcy.

INCOME STATEMENT (IN MILL$): January 1, 2019 – December 31, 2019

Revenue = 400; Gross Profit Margin = 30%; Operating Expenses (before depreciation) = 20; Depreciation = 20; Interest = 10; Average Tax Rate =40%; Preferred Dividend = 5; Common Dividend= 7; # of shares outstanding=10 million; Per Share Price of Common Stock = $50.00

BALANCE SHEET (IN MILL$): December 31, 2019

Cash = 5; A/R = 20; Inventory = 55; Net Fixed Asset = 120; Accounts Payable= 10; Accrued Wages =5; Notes Payable = 5; Bonds (@5%) = 80; Preferred Stock = 10;

Common Equity: Common Stock ($1 par) = 10, Paid-in-Capital = 10, Retained Earnings = 70.

Prepare an income statement & a balance sheet based on the information above.

Problem 2: (Revised 6.3) Magazine Advertising: In a study of revenue from advertising, data were collected for 41 magazines list as follows. The variables observed are number of pages of advertising and advertising revenue. The names of the magazines are listed as:

(use sas）

Adv Revenue

25 50

15 49.7

20 34

17 30.7

23 27

17 26.3

14 24.6

22 16.9

12 16.7

15 14.6

8 13.8

7 13.2

9 13.1

12 10.6

1 8.8

6 8.7

12 8.5

9 8.3

7 8.2

9 8.2

7 7.3

1 7

77 6.6

13 6.2

5 5.8

7 5.1

13 4.1

4 3.9

6 3.9

3 3.5

6 3.3

4 3

3 2.5

3 2.3

5 2.3

4 1.8

4 1.5

3 1.3

3 1.3

4 1

2 0.3

1. Fit a linear regression equation relating advertising revenue to advertising pages. Verify that the fit is poor.
2. Choose an appropriate transformation of the data and fit the model to the transformed data. Evaluate the fit.
3. You should not be surprised by the presence of a large number of outliers because the magazines are highly heterogeneous and it is unrealistic to expect a single relationship to connect all of them. Find outliers and high leverage points. Delete the outliers and obtain an acceptable regression equation that relates advertising revenue to advertising pages.
4. For the deleted data, check the homogeneity of the variance. Choose an appropriate transformation of the data and fit the model to the transformed data. Evaluate the fit.

Prepare the statement of cash flow.

Define and discuss the relationship between clinical documentation improvement, electronic document management, and revenue cycle management.

Exercise 1) Accountics Corp. expects service revenue in the next 6 months as follows: November $216,000 February $195,000 December $355,000 March $370,000 January $280,000 April $555,000 Prior experience has shown that the following collections are made:  22.77 percent of a month’s revenue is collected in the month the service is performed  25.03 percent in the month following the service being performed  18.99 percent in the second month following the service being performed  13.13 percent in the third month following the service being performed  7.82 percent in the fourth month following the service being performed  Remainder is collected in the fifth month following the service being performed September and October service revenues were $175,000 and $190,000 respectively. Past experience shows that 3.33 percent of revenues are never collected (i.e., bad debts). Required: Estimate budgeted cash receipts (service revenue collected) for February, March, and April.