Prepare the ABC Corporation Balance Sheet for the year ended December 31, 2016
| ABC Corporation | ||
| Adjusted Trial Balance | ||
| December 31, 2016 | ||
| Debit | Credit | |
| Cash | $ 875,444 | |
| Accounts receivable | 442,120 | |
| Allowance for doubtful accounts | 75,000 | |
| Inventory | 70,000 | |
| Allowance to Reduce Inventory to NRV | 16,000 | |
| Purchases | - | |
| Prepaid insurance | 4,500 | |
| Land | 88,000 | |
| Building | 37,500 | |
| Accumulated depreciation: building | 1,265 | |
| Equipment | 21,600 | |
| Accumulated depreciation: equipment | 9,900 | |
| Patent | 45,000 | |
| Accounts payable | 88,851 | |
| Notes payable | 40,000 | |
| Income taxes payable | 111,931 | |
| Interest Payable | 35,300 | |
| Unearned rent revenue | 9,000 | |
| Bonds Payable | 700,000 | |
| Premium on Bonds Payable | 52,045 | |
| Wages Payable | 4,000 | |
| Common stock | 135,000 | |
| PIC In Excess of Par-Common Stock | 130,000 | |
| Retained earnings | - | |
| Treasury stock | 10,000 | |
| Dividends | 28,000 | |
| Sales Revenue | 790,000 | |
| Rent Revenue | 4,500 | |
| Advertising expense | 9,240 | |
| Wages expense | 66,150 | |
| Office expense | 28,500 | |
| Depreciation expense | 11,165 | |
| Utilities expense | 33,571 | |
| Interest Expense | 300 | |
| Bond Interest Expense | 30,271 | |
| Insurance expense | 22,500 | |
| Impairment Loss Expense | 5,000 | |
| Loss expense due to reduction | 16,000 | |
| Income taxes expense | 111,931 | |
| Bad Debt Expense | 75,000 | |
| Cost od Goods Sold | 177,000 | |
| Paid in Capital Treasury Stock | 6,000 | |
| 2,208,792 | 2,208,792 | |
In: Accounting
Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2018, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,660,000. Curtiss concludes that the contract does not qualify for revenue recognition over time. The building was completed on December 31, 2020. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2018 At 12-31-2019 At 12-31-2020 Percentage of completion 10 % 60 % 100 % Costs incurred to date $ 405,000 $ 2,940,000 $ 5,031,000 Estimated costs to complete 3,260,000 2,030,000 0 Billings to Axelrod, to date 885,000 2,390,000 4,660,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2018 and 2019 as either cost in excess of billings or billings in excess of costs.
In: Accounting
Curtiss Construction Company, Inc., entered into a fixed-price
contract with Axelrod Associates on July 1, 2018, to construct a
four-story office building. At that time, Curtiss estimated that it
would take between two and three years to complete the project. The
total contract price for construction of the building is
$5,080,000. Curtiss concludes that the contract does not qualify
for revenue recognition over time. The building was completed on
December 31, 2020. Estimated percentage of completion, accumulated
contract costs incurred, estimated costs to complete the contract,
and accumulated billings to Axelrod under the contract
were as follows:
| At 12-31-2018 | At 12-31-2019 | At 12-31-2020 | |||||||||
| Percentage of completion | 10 | % | 60 | % | 100 | % | |||||
| Costs incurred to date | $ | 377,000 | $ | 3,276,000 | $ | 5,528,000 | |||||
| Estimated costs to complete | 3,393,000 | 2,184,000 | 0 | ||||||||
| Billings to Axelrod, to date | 738,000 | 2,530,000 | 5,080,000 | ||||||||
Required:
1. Compute gross profit or loss to be recognized as a
result of this contract for each of the three years.
2. Assuming Curtiss recognizes revenue over time
according to percentage of completion, compute gross profit or loss
to be recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over time
according to percentage of completion, compute the amount to be
shown in the balance sheet at the end of 2018 and 2019 as either
cost in excess of billings or billings in excess of costs.
In: Accounting
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
| Fixed Component per Month |
Variable Component per Job |
Actual Total for February |
|||||||
| Revenue | $ | 279 | $ | 36,310 | |||||
| Technician wages | $ | 8,400 | $ | 8,250 | |||||
| Mobile lab operating expenses | $ | 4,900 | $ | 34 | $ | 9,500 | |||
| Office expenses | $ | 2,400 | $ | 4 | $ | 2,810 | |||
| Advertising expenses | $ | 1,550 | $ | 1,620 | |||||
| Insurance | $ | 2,890 | $ | 2,890 | |||||
| Miscellaneous expenses | $ | 940 | $ | 1 | $ | 385 | |||
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $34 per job, and the actual mobile lab operating expenses for February were $9,500. The company expected to work 140 jobs in February, but actually worked 144 jobs.
Required:
Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. ( This report must include - jobs, revenue, expenses: technological wages, mobile lab operating expense, office expense, advertising expense, insurance, and miscellaneous expenses for both flexible and planning budget. (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
Required: Complete the following worksheet for Appliance Repair for the year ended 30 June 2020.
Additional information to complete the worksheet:
Appliance Repair Worksheet For the year ended 30 June 2020 |
||||||||||
|
Trial Balance (Unadjusted) |
Adjustments |
Trial Balance (Adjusted) |
Income Statement |
Balance Sheet |
||||||
|
Account title |
Debit |
Credit |
Debit |
Credit |
Debit |
Credit |
Debit |
Credit |
Debit |
Credit |
|
Cash at bank |
37,500 |
|||||||||
|
Accounts receivable |
127,500 |
|||||||||
|
Prepaid insurance |
1,800 |
|||||||||
|
Supplies |
900 |
|||||||||
|
Equipment |
67,500 |
|||||||||
|
Accumulated depreciation-Equipment |
||||||||||
|
Accounts payable |
2,700 |
|||||||||
|
Unearned revenue |
3,150 |
|||||||||
|
Interest payable |
||||||||||
|
Bank loan (due in 2028) |
75,000 |
|||||||||
|
Capital |
49,950 |
|||||||||
|
Service revenue |
157,500 |
|||||||||
|
Wages expense |
52,500 |
|||||||||
|
Supplies expense |
600 |
|||||||||
|
Depreciation expense – Equipment |
||||||||||
|
Insurance expense |
||||||||||
|
Interest expense |
||||||||||
|
288,300 |
288,300 |
|||||||||
In: Accounting
1. When economists refer to land as a productive input for a firm, they are not only thinking about land itself but also the:
| A. | buildings and machinery that are on the land and that serve as productive inputs. |
| B. | natural resources that come from the land such as oil, minerals, and trees. |
| C. | alternative uses for the land such as housing, agriculture or a site for needed infrastructure. |
| D. | gains that landowners receive from the use of their land in production. |
2. Physical capital includes:
| A. | all manufactured products used to produce goods and services. |
| B. | just the machinery required to produce a firm’s goods. |
| C. | only the buildings used for production. |
| D. | education and training received by a firm’s physical employees. |
3. In addition to land and physical capital, economists consider _____ as factors of production.
| A. | raw materials and electricity |
| B. | good ideas and natural resources |
| C. | human capital and innovation |
| D. | market intelligence and strong demand |
4. The marginal revenue product of capital is the:
| A. | additional revenue generated by selling an additional unit of product. |
| B. | firm’s average product multiplied by the firm’s average revenue per unit sold. |
| C. | additional physical output from an additional employee multiplied by the price of the product. |
| D. | marginal physical product of an additional unit of capital multiplied by the product’s price. |
5. Economists use _____ to determine the value today of amounts to be received in the future.
| A. | income averaging |
| B. | present value analysis |
| C. | gain calculations |
| D. | arithmetic sums |
In: Economics
Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $1 million in a start-up firm. He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year’s operations of the two firms he is considering and give him some business advice.
| Company Name | |||||||
| Larson | Benson | ||||||
| Variable cost per unit (a) | $ | 21.00 | $ | 10.50 | |||
| Sales revenue (8,200 units × $31.00) | $ | 254,200 | $ | 254,200 | |||
| Variable cost (8,200 units × a) | (172,200 | ) | (86,100 | ) | |||
| Contribution margin | $ | 82,000 | $ | 168,100 | |||
| Fixed cost | (24,700 | ) | (110,800 | ) | |||
| Net income | $ | 57,300 | $ | 57,300 | |||
Required
Use the contribution margin approach to compute the operating leverage for each firm.
If the economy expands in coming years, Larson and Benson will both enjoy a 10 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase.)
If the economy contracts in coming years, Larson and Benson will both suffer a 10 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase.)
In: Accounting
Problem 2-23B Analysis of operating leverage
June Wade has invested in two start-up companies. At the end of the first year, she asks you to evaluate their operating performance. The following operating data apply to the first year:
|
Company Name |
||
|
Cook |
Penn |
|
|
Variable cost per unit (a) |
$ 16 |
$ 8 |
|
Sales revenue (8,000 units × $25) |
$200,000 |
$200,000 |
|
Variable cost (8,000 units × a) |
(128,000) |
(64,000) |
|
Contribution margin |
72,000 |
136,000 |
|
Fixed cost |
(40,000) |
(104,000) |
|
Net income |
$ 32,000 |
$ 32,000 |
Required
Use the contribution margin approach to compute the operating leverage for each firm.
If the economy expands in the coming year, Cook and Penn will both enjoy a 10 percent per year increase in sales volume, assuming that the selling price remains unchanged. (Note: Since the number of units increases, both revenue and variable cost will increase.) Compute the change in net income for each firm in dollar amount and in percentage.
If the economy contracts in the following year, Cook and Penn will both suffer a 10 percent decrease in sales volume, assuming that the selling price remains unchanged. (Note: Since the number of units decreases, both revenue and variable cost decrease.) Compute the change in net income for each firm in both dollar amount and percentage.
Write a memo to June Wade with your evaluation and recommendations.
In: Accounting
Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2016, year-end balance sheet:
| Current assets: | |
| Accounts receivable, net of $24,000 in allowance for | |
| uncollectible accounts | $218,000 |
| Interest receivable | 6,800 |
| Notes receivable | 260,000 |
Additional Information:
1. The notes receivable account consists of two notes, a $60,000 note and a $200,000 note. The $60,000 note is dated October 31, 2016, with principal and interest payable on October 31, 2017. The $200,000 note is dated June 30, 2016, with principal and 6% interest payable on June 30, 2017.
2. During 2017, sales revenue totaled $1,340,000, $1,280,000 cash was collected from customers, and $22,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable.
3. On March 31, 2017, the $200,000 note receivable was discounted at the Bank of Commerce. The bank’s discount rate is 8%. Chamberlain accounts for the discounting as a sale.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain’s 2017 income statement?
2. What amounts will appear in the 2017 year-end balance sheet for accounts receivable?
3. Calculate the receivables turnover ratio for 2017.
In: Accounting
The following is Baker Co.'s Pre-Closing Trial Balance as of December 31, 2017. Baker's accounting period is a month, thus the balances in the temporary accounts are for the month of December 2017.
|
Account |
Debit |
Credit |
|
Cash |
10,000 |
|
|
Accounts Receivable |
25,000 |
|
|
Inventory |
40,000 |
|
|
Supplies |
5,000 |
|
|
Equipment |
100,000 |
|
|
Accumulated Depreciation |
30,000 |
|
|
Accounts Payable |
12,000 |
|
|
Note Payable |
13,000 |
|
|
Interest Payable |
3,000 |
|
|
Unearned Revenue |
8,000 |
|
|
Dividends Payable |
7,000 |
|
|
Common Stock |
10,000 |
|
|
Retained Earnings |
46,000 |
|
|
Sales Revenue |
193,000 |
|
|
Cost of Goods Sold |
78,000 |
|
|
Depreciation Expense |
18,000 |
|
|
Wages Expense |
42,000 |
|
|
Supplies Expense |
3,000 |
|
|
Interest Expense |
1,000 |
|
|
Total |
322,000 |
322,000 |
Use the information in Baker’s Trial balance to answer questions D through H.
D. In the General Journal below record the journal entry that should be made to close the Revenue account(s).
E. In the General Journal below record the journal entry that should be made to close the Expense accounts.
F. Based on Baker’s account balances, the amount of Net Income that would be shown on Baker’s Income Statement for December 2017 would be:
G. Based on Baker’s account balances, the amount of Total Assets that would be shown on Baker’s Balance Sheet as of December 31, 2017 would be:
H. Based on Baker’s account balances, the amount of Total Equity that would be shown on Baker’s Balance Sheet as of December 31, 2017 would be:
In: Accounting