QUESTION 3

A manager at Stalemate, a chess business retailing chess boards and providing chess lessons, requires help with interpreting some of the accounting transactions that took place during the month of September 2020. The manager has provided you with a list of those transactions below.

Required:

Underneath each transaction in the space provided, write a brief narration describing the economic event that corresponds to that transaction.

PRACTICE PROBLEM

Utilizing the following information, prepare a multi-step income statement (with basic EPS) for Waterway Company, a manufacturing company, for 2017. The company’s income tax rate is 30%. There were 500,000 shares of common stock outstanding all year.

Dividends declared on preferred stock                                                                           84,100

Dividends declared on common stock                                                                           262,300

Gain on sale of investments                                                                                          111,100

Discontinued operations: loss on disposal of the wholesale division (gross)                     445,600

Discontinued operations: loss on operations of the wholesale division (gross)                   96,080

Sales revenue                                                                                                            26,211,300

Cost of goods sold                                                                                                      16,244,400

Interest revenue                                                                                                            73,900

Selling expenses                                                                                                          2,439,200

Administrative expenses                                                                                              1,450,300

Loss due to flood damage                                                                                             392,600

Rent revenue                                                                                                               520,000

Notes: If a company has an overall loss on discontinued operations, earnings per share for discontinued operations should be represented as a loss (i.e., negative). Preferred dividends are also not subtracted from the numerator when calculating earnings per share on a loss (since there is no income to distribute). Earnings per share should be rounded to the nearest cent.

You are The Chief Finance Officer for your company, Blue Label Inc. and a Fellow of the local accountancy body, The Association Certified Chartered Accountants (ACCA).   You have just received an invitation from ACCA requesting you to be one of the presenters at a workshop organized by the institute to fulfill its mandate of enhancing professional competence in its members amid many new standards that have evolved in the recent past. Your specific role will be to talk about the evolution of IFRS 15 Revenue from Contracts with Customers. The workshop organizer has asked you to send your presentation beforehand for review by a relevant official.

Required:

Write briefing notes to the organizer that explain the following in relation to IFRS 15 Revenue from Contracts with Customers :

1. The five step revenue recognition criteria (using simple illustrations as far as possible)

2. Recognition and measurement requirements for:

(i) sale and repurchase arrangements;

(ii) consignment inventory and

(iii) Bill and hold arrangements (use simple illustrations as far as possible).

Be concise and clear ,give practical example were possible

Employees at Cutting Edge disagree about the accounting for sales returns. The sales manager believes that granting more generous returns policy can give the company a competitive edge and increase sales revenue. The controller cautions that, depending on the terms granted, loose return provisions might lead to non-GAAP revenue recognition. The company CFO would like you to research the issue to provide an authoritative answer.

Required: Prepare a research report using authoritative literature addressing revenue recognition when right of return exits and describe the accounting when there is a right of return. Include what is meant by “right of return” in your report. Your research report should include a discussion of the relevant FASB Codification section (s) that you used in developing report. Summarize what you discovered in your research in your own words – do not simply quote from the Codification. The research report should be no longer than two pages in length, single-spaced, and contain proper citations following APA Style format.

Cash Budget
Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:

All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 80 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $41,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $40,000.

Prepare monthly cash budgets for February, March, and April.

Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers.

The adjusted trial balance for Turnquist Company is shown below. TURNQUIST COMPANY Trial Balance August 31, 2017 Before Adjustment After Adjustment Dr. Cr. Dr. Cr. Cash $10,100 $10,100 Accounts Receivable 8,600 10,000 Supplies 2,500 600 Prepaid Insurance 3,800 2,500 Equipment 14,300 14,300 Accumulated Depreciation-Equipment $ 3,600 $ 4,400 Accounts Payable 5,800 5,800 Salaries and Wages Payable 0 1,100 Unearned Rent Revenue 1,400 700 Owner’s Capital 15,600 15,600 Service Revenue 33,800 35,200 Rent Revenue 11,200 11,900 Salaries and Wages Expense 16,900 18,000 Supplies Expense 0 1,900 Rent Expense 15,200 15,200 Insurance Expense 0 1,300 Depreciation Expense 0 800 $71,400 $71,400 $74,700 $74,700 Prepare the income statement for the year. TURNQUIST COMPANY Income Statement $

1. Prepare Income statement for the year 2.Prepare owners Equity for the year 3.Prepare balance sheet at August 31 4.Liability and owners Equity

P6.12 The Inviting Inn has 500 available guest rooms. For a certain week next month, the anticipated transient demand for rooms is as follows.

Monday 200

Tuesday 200

Wednesday 200

Thursday 200

Friday 100

Saturday 50

Sunday 50

The Inviting Inn also has committed the following number of rooms for group sales during the same week:

Monday 200

Tuesday 200

Wednesday 300

Thursday 300

Friday 100

Saturday 100

Sunday 100

The Inn has the possibility of booking another of 100 rooms for the night of Tuesday, Wednesday,Thursday and Friday of that week at a discounted rate of $60 per room. The inn's rack rate for transient guests is $80, and it marginal cost per room sold is $15.

a. Assuming the new group is booked, calculate the additional net sales revenue gross sales revenue less marginal costs, to the inn.

b. What factors, other than net sales revenue, might you consider before committing to this new group sale.

I am trying to determine operating cash flow for years 1, 2, 3 and 4 for a company who is evaluating a new MRI machine. I calculated the revenue based on # of scans times the net revenue for each scan and got $900,000. Should this figure remain the same for years 2, 3, and 4 or does the neutral inflation rate of 2% need to be added to each?

Also, does depreciation, variable and fixed costs change with the 2% neutral inflation rate? I am thinking that fixed costs and depreciation will not change.