1. Explain Revenue Recognition methods (percentage of completion, completed production, traditional, installment)
2. Explain Expense Recognition methods (cause & effect, rational & systematic, immediate recognition)
3. Describe Fair value hierarchy: Level 1 - observable (quoted prices), Level 2 (prices of similar items observable), Level 3 (non-observable – must base value on assumptions)
4. Identify the four basic assumptions of accounting: Economic entity, monetary unit, periodicity, and going concern
5. Recognize the two fundamental qualitative characteristics of financial reporting: Relevance and Faithful representation
In: Accounting
Information pertaining to Noskey Corporation’s sales revenue follows:
| November 2018 (Actual) |
December 2018 (Budgeted) |
January 2019 (Budgeted) |
||||||||||
| Cash sales | $ | 80,000 | $ | 100,000 | $ | 60,000 | ||||||
| Credit sales | 240,000 | 360,000 | 180,000 | |||||||||
| Total sales | $ | 320,000 | $ | 460,000 | $ | 240,000 | ||||||
Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25% is paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling price.
Required:
Determine for Noskey:
1. Budgeted cash collections in December 2018 from November 2018 credit sales.
2. Budgeted total cash receipts in January 2019.
3. Budgeted total cash payments in December 2018 for inventory purchases.
Information pertaining to Noskey Corporation’s sales revenue follows: November 2018 (Actual) December 2018 (Budgeted) January 2019 (Budgeted) Cash sales $ 80,000 $ 100,000 $ 60,000 Credit sales 240,000 360,000 180,000 Total sales $ 320,000 $ 460,000 $ 240,000 Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25% is paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling price. Required: Determine for Noskey: 1. Budgeted cash collections in December 2018 from November 2018 credit sales. 2. Budgeted total cash receipts in January 2019. 3. Budgeted total cash payments in December 2018 for inventory purchases.
In: Accounting
1. According to the Internal Revenue Code, bonus depreciation under §168(k) is mandatory. Explain.
2. Joseph Enterprises purchased twelve desktop computers for business use. Each computer cost $1,350. As you recommended, Joseph Enterprises purchased each computer separately. Explain.
In: Accounting
Exercise 9-16 Flexible Budgets and Revenue and Spending Variances [LO9-1, LO9-3]
Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June:
| Fixed Element per Month |
Variable Element per Liter |
Actual Total for June |
|||||||
| Revenue | $ | 12.00 | $ | 71,540 | |||||
| Raw materials | $ | 4.65 | $ | 29,230 | |||||
| Wages | $ | 5,600 | $ | 1.40 | $ | 13,860 | |||
| Utilities | $ | 1,630 | $ | 0.20 | $ | 3,270 | |||
| Rent | $ | 2,600 | $ | 2,600 | |||||
| Insurance | $ | 1,350 | $ | 1,350 | |||||
| Miscellaneous | $ | 650 | $ | 0.35 | $ | 2,590 | |||
While gelato is sold by the cone or cup, the shop measures its activity in terms of the total number of liters of gelato sold. For example, wages should be $5,600 plus $1.40 per liter of gelato sold and the actual wages for June were $13,860. Via Gelato expected to sell 6,000 liters in June, but actually sold 6,200 liters.
Required:
Calculate Via Gelato revenue and spending variances for June. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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.
a. Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Colbert sells Lyle Cartright a 3D system, receiving a $5,000 zero-interest-bearing note on January 1, 2020. The cost of the 3D printer system is $4,000. Colbert imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2020, and compute the total amount of revenue to be recognized in 2020.
b. 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
Company Balanced Scorecard
| Financial | reduce cost | increase profits | increase revenue in targeted markets | |
| Customer | Improvement customized customer experience | increase awareness as an industry leader | ||
| Internal Business Processor | Improve Internal Efficiency | Increase Acquisitions | Increase Consulting Knowledge sharing | Improve Product/Service Offerings |
| Learning & Growth | Increase Employee Expertise | Optimize Technology | Optimize Human Capital | Improve Thought Leadership |
Using the four perspectives, design a balanced scorecard for the organization you either work for or volunteer.e examples.)
All of your strategic objectives should begin with an action word (Improve, Reduce, Increase, Optimize, Maximize, Minimize are examples.) Complete your strategy map and identify the relationships among the strategy objectives you determined.
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
BREAK-EVEN ANALYSIS EXERCISE
Break-even analysis attempts to determine the volume of sales necessary for a business to cover costs, or to make revenue equal costs. It is helpful in setting prices, estimating profit or loss potentials, and planning for the coming period.
The general formula for calculating break-even units is:
Break-even Units = Fixed Costs / Price – Unit Variable Cost
1. An important distinction is made in the calculation between fixed and variable costs. Fixed costs do not change with the units sold (at least in the short term). Variable costs depend on the units sold in the period. Identify each of the following as a fixed (F) or variable (V) cost in the context of BizCafe:
F or V | |
Coffee | |
Advertising | |
Rent | |
Salaries | |
Cups | |
Utilities |
Use the break-even formula to calculate the break-even units if fixed costs are $12,000 and you are selling coffee for $3.60 at a cost of $0.40 per cup.
3. Using the same fixed and variable costs as in question 2, what is the new
break-even point if price is lowered to $2.90?
You can calculate a break-even price if you have an estimate of the number of units you will sell. The revised break-even formula is:
Break-even Price= Variable Cost+Fixed Costs / Projected Units
4. Using the fixed and variable costs from question 2, what is the break
-even price if you project that you will sell 3,000 cups of coffee?
5. How can knowing the break-even units help you with other decisions?
In: Finance
NEW BUSINESS VENTURE ASSIGNMENT #5
Business Model Canvas elements: Revenue Streams, Cost Structure
Answer the following questions and upload the completed form to Canvas.
Your business idea : can choose any business to fill the question or blanks below as being asked.
Example (edit and change for your business)
|
Item |
Price |
Quantity sold per month |
Quantity sold per year |
3A. Variable costs: What do you believe your costs will be (materials + labor + distribution) per unit sold? Fill in this sheet with your own info and calculate total.
Example (edit and change for your business)
|
Item |
Amount per unit |
|
|
Total variable costs spent per month |
$ |
= cost per unit x quantity sold per month |
|
Total variable costs spent per year |
= cost per unit cost x quantity sold per year |
3B. Fixed costs: What do you think your fixed monthly costs are going to be? Fixed costs must be paid regardless of number of units sold. (e.g. utilities, rent, employee salaries etc.) Fill in this sheet with your own info and calculate total.
Example (edit and change for your business)
|
Item |
Amount per month |
Amount per year |
|
Total fixed costs |
3C. One-time costs: What are the one-time costs you need to spend to get this business up and running (equipment, down payment, business cards, website creation, equipment purchase etc.)? These costs only occur once and are not part of the ongoing business costs. Edit and complete this table with your own info.
Example
|
Item |
Amount |
|
|
Total one-time costs |
Fill in this chart with the correct calculated numbers using the information you entered in the charts above.
|
Monthly |
Yearly |
||
|
Quantity of units sold |
Use your answer from question #2 |
||
|
Price per unit |
Use your answer from question #2 |
||
|
Cost per unit |
Use your answer from question #3A |
||
|
Revenue |
Revenue = price x quantity of units sold |
||
|
Variable Costs |
Use your answer from question #3A |
||
|
+ Fixed costs |
Use your answer from question #3B |
||
|
= Total Costs |
Variable costs + fixed costs = total costs |
||
|
= Profit |
Profit = Revenue – Total Costs |
In: Accounting
nformation pertaining to Noskey Corporation’s sales revenue follows:
| November 2018 (Actual) |
December 2018 (Budgeted) |
January 2019 (Budgeted) |
||||||||||
| Cash sales | $ | 180,000 | $ | 160,000 | $ | 100,000 | ||||||
| Credit sales | 360,000 | 500,000 | 260,000 | |||||||||
| Total sales | $ | 540,000 | $ | 660,000 | $ | 360,000 | ||||||
Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25% is paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling price.
Required:
Determine for Noskey:
1. Budgeted cash collections in December 2018 from November 2018 credit sales.
2. Budgeted total cash receipts in January 2019
*the question gives the following layout:
January 2019
Cash sales in January
Collections from credit sales in January:
Total collectible from credit sales
Percentage to be collected in January
Collections from credit sales in December:
Total collectible from credit sales
Percentage to be collected in January
Budgeted total cash receipts in January
3. Budgeted total cash payments in December 2018 for inventory purchases.
*layout given in problem:
Total inventory purchases in November:
For November Sales:
For December Sales:
Percentage of November purchases to be paid in December:
Payment in December for purchases in November:
Budgeted purchases in December:
For December sales:
For January sales:
Percentage of December purchases to be paid in December
Payment in December for purchases in December
Budgeted cash payment in December for inventory purchases
In: Accounting