Presented below is information related to Tobias Corp., for the year 2020. Required: Prepare a multiple-step Income Statement and Statement of Retained Earnings for 2020 in good form (with headings). Assume the 300,000 shares of common stock were outstanding during 2020.

Administrative Expenses 70,000

Cost of Goods Sold 1,200,000

Depreciation Expense overstated in 2015 105,000

Dividend revenue 30,000

Dividends Declared 120,000

Effect on prior years of Change in Accounting Principle (credit) 220,000

Gain from sale of land in discontinued component 300,000

Interest Expense 45,000

Interest Revenue 20,000

Loss from operations in discontinued component of business 240,000

Retained Earnings, 1/1/2020 460,000

Sales Discounts 12,000

Sales Return & Allowances 50,000

Sales Revenue $ 1,950,000

Selling Expenses 95,000

Write-off of Goodwill due to Impairment 75,000

Federal tax rate of 20% on all items

BLC offers its customers two lawn maintenance services. One service is for a one-year maintenance plan at a cost of $180. Customers can earn a 5% discount from this price if they pay before BLC’s calendar fiscal year for maintenance services to be performed in the following year. The second service offered by BLC is a three-year maintenance plan that sells for $500. The first year’s maintenance service for this three-year plan will be delivered before BLC’s fiscal year end. No discount for early payment is offered for the second plan.

a) Prepare the summary journal entry for the cash sale of 180 one-time plans for the current year, 100 discounted one-time plans for the following year, and 280 three-year maintenance plans.

b) Determine the statement of financial position (SFP) classification of the unearned portion of the revenue collected.

Q6

A.Thelma and Louise are neighbours. During the winter, it is impossible for a snowplow to clear the street in front of Thelma’s house without clearing the front of Louise’s. Thelma’s marginal benefit from snowplowing services is 12 - Z, where Z is the number of times the street is plowed. Louise’s marginal benefit is 8 - 2Z. The marginal cost of getting the street plowed is $16. Sketch the two marginal benefit schedules and the aggregate marginal benefit schedule. Draw in the marginal cost schedule, and find the efficient level of provision for snowplowing services.

B. Suppose the snowplowing service described in Section A is financed by distortionary taxation. The MCF varies with the amount of tax revenue, R, that is raised:

MCF = 1 + 0.0002441R2

If tax revenue is raised only to finance the snowplowing of Thelma and Louise’s street, what is the optimal provision of the snowplowing service? (Assume that snowplowing does not affect the amount of revenue generated by the tax system and that the average cost of snowplowing is equal to the marginal cost, $16.)

1. An oil company was evaluating the economic performance of one of its recompleted wells to decide whether to abandon it. The company uses 10% MARR or hurdle rate. The well is expected to produce for another 5 years. Year 1 post recompletion revenue was $500,000. Annual revenues are anticipated to drop by $50,000 each year starting in year 2.

a) What is the forecast revenue for year 4?

b) What is the equivalent annual worth of the revenue for the five year period?

2. A large building HVAC system has an estimated life expectancy of 12 more years. Replacement at that time is expected to cost $350,000. The building engineer is considering a plan to set aside equal annual deposits into a fund bearing 8 percent annual interest so that $350,000 will be on hand in 12 years. If he is ready to make a deposit right now, what equal amounts should he deposit now and for each of the next twelve years?

CircuitTown commenced a gift card program in January 2018 and sold $10,000 of gift cards in January, $15,000 in February, and $16,000 in March of 2018 before discontinuing further gift card sales. During 2018, gift card redemptions were $6,000 for the January gift cards sold, $4,500 for the February cards, and $4,000 for the March cards. CircuitTown considers gift cards to be “broken” (not redeemable) 10 months after sale.
  
Required:
1. How much revenue will CircuitTown recognize with respect to January gift card sales during 2018?
2. Prepare journal entries to record the sale of January gift cards, redemption of gift cards (ignore sales tax), and breakage (expiration) of gift cards.
3. How much revenue will CircuitTown recognize with respect to March gift card sales during 2018?
4. What liability for deferred revenue associated with gift card sales would CircuitTown show as of December 31, 2018?

True or False

Indirect costs are usually included in the costs that are allocated to activity cost pools in an activity-based costing system

In the first-stage allocation in an ABC system, some costs may be allocated to a special cost pool that are not subsequently allocated to products or customers.

The activity variance for revenue is favorable if the revenue in the flexible budget exceeds the revenue in the static planning budget.

A favorable spending variance occurs when the cost in the flexible budget exceeds the amount of that actual cost (i.e. the corresponding cost in the actual results).

If the required rate of return is 15% and the internal rate of return of a potential investment 10%, the company should deem the investment acceptable.

When cash flows are uneven and vary from year to year, the net present value method is harder to calculate than the internal rate of return method.

In capital budgeting computations, discounted cash flow methods assume that all cash flows occur at the beginning of a period.

Use the following selected data from Business Solutions’s income statement for the three months ended March 31, 2020, and from its March 31, 2020, balance sheet to complete the requirements. Computer services revenue $ 25,665 Net sales (of goods) 21,804 Total sales and revenue 47,469 Cost of goods sold 13,292 Net income 20,544 Quick assets 91,052 Current assets 95,328 Total assets 120,496 Current liabilities 1,095 Total liabilities 1,095 Total equity 119,401 Required: 1. Compute the gross margin ratio (both with and without services revenue) and net profit margin ratio. 2. Compute the current ratio and acid-test ratio. 3. Compute the debt ratio and equity ratio. 4. What percent of its assets are current? What percent are long term?

Compute the current ratio and acid-test ratio. (Round your answers to 1 decimal place.)

This week you will continue working on creating a Business Plan for a new health care organization. Please read the requirements of this discussion board carefully as it varies from our usual format.

ge 312 of the eText explains that the following items are addressed in the Income Statement Assumptions section of a business plan:

• Revenue type/Revenue source(s)
• Revenue amount (e.g., as determined based on per patient, per visit, per month, per grant amount)
• Labor expenses
• Supply expenses
• Cost of drug or device expenses (if applicable)
• Equipment expenses
• Space occupancy expenses (e.g., rent, utilities)
• Overhead (insurance, etc.)

For your original post: (1) remind us about your new health care business, (2) address the values that you have determined/assumed for each of the items above, and (3) explain how you came to determine/assume the values for each of the items listed above.