AFT provides helicopter tours of the Grand Canyon. Clients pre-book tours on-line and pay the following fees at the time of booking:

1. a $10 administration fee for processing the booking and potential cancellations,

2. A $20 fee for guaranteeing the reservation and

3. $300 for the helicopter tour itself.

Bookings can be placed as far as one year in advance. If the client cancels the booking more than 2 weeks in advance of the booked tour date, all fees except the administration fee is refundable. If the client cancels the booking within two weeks before the tour date, but before one week of the booked tour date, only the helicopter tour fee is refunded. If client cancels within one week or fails to show up for the scheduled tour, no fees are refunded.

AFT has been in business for several years and can estimate the number of clients that will cancel or not show up for a booked tour. Cost of providing the helicopter tour can also be estimated.

Required:

Discuss the performance obligations AFT has in relation to revenue recognition in the above scenario. When should AFT recognize each of the fees ($10, $20, and $300) as revenue?

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,475,000. During 2021, costs of $2,190,000 were incurred, with estimated costs of $4,190,000 yet to be incurred. Billings of $2,728,000 were sent, and cash collected was $2,440,000.

In 2022, costs incurred were $2,728,000 with remaining costs estimated to be $3,885,000. 2022 billings were $2,978,000, and $2,665,000 cash was collected. The project was completed in 2023 after additional costs of $3,990,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.
2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2022 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022.

**** Only Need answers for questions g and h****

Suppose that, in the absence of insurance, the daily demand for visits to a clinic is given by Qd = 200 – 0.5P, where c is the coinsurance rate and P is the price charged by the clinic.

a) Calculate the quantity demanded when P is $100.

b) Calculate daily revenues when P is $100.

Now assume that customers pay a coinsurance rate, c. You will need to modify the demand function to account for the coinsurance.

c) Calculate the quantity demanded when P is $100 and the coinsurance rate is 0.4.

d) Calculate the daily revenue for the values given in (c).

e) Calculate the quantity demanded when P is $100 and the coinsurance rate is 0.8.

f) Calculate the daily revenue for the values given in (e).

Assume the clinic’s daily capacity is 100 customers.

g) Calculate the price the clinic should set to exactly use its entire capacity when there is no coinsurance (i.e., the co-coverage rate is 1).

h) Calculate the price the clinic should set to exactly use its entire capacity when there is a coinsurance rate of 0.8

Answers:

1. 150
2. 15000
3. 110
4. 11000
5. 70
6. 7000

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:

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $31 per job, and the actual mobile lab operating expenses for February were $8,980. The company expected to work 140 jobs in February, but actually worked 142 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (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.)

WASHINGTON — The House failed on Thursday to advance a constitutional amendment that would require Congress not spend more than the nation collects in revenue. Some conservative lawmakers had hoped a vote on the bill would calm grassroots conservatives who had been fuming about recent high levels of spending. On a mostly party line vote, Republicans failed to advance the bill, 233-184. Normally, legislation requires 218 votes to win approval in the House and can be passed with just Republican votes. The balanced budget amendment, however, required bipartisan support with a two-thirds majority vote because it was a constitutional amendment. Analyze the following situations. The economy goes into a recession. A. What automatically happens to tax revenue and government spending during a recession? (See chapter 27) Why? (Does the budget go into deficit, surplus or stay balanced?) 5 points B. If the balanced budget amendment was in effect, what would the federal government have to do to obtain a balanced budget? 5 points C. What would happen to the recession? Why? (Would the recession improve, get worse or stay the same? 5 points

5. The following ledger accounts are used by the Heartland Race Track:

Accounts Receivable

Prepaid Advertising

Prepaid Rent

Unearned Sales Revenue

Sales Revenue

Advertising Expense

Rent Expense

Instructions:

For each of the following transactions below, prepare the journal entry (if one is required) to record the initial transaction and then prepare the adjusting entry, if any, required on November 30, the end of the fiscal year.

(a) On November 1, paid rent on the track facility for three months, $150,000.

(b) On November 1, sold season tickets for admission to the racetrack. The racing season is year-round with 25 racing days each month. Season ticket sales totaled $960,000.

(c) On November 1, borrowed $250,000 from First National Bank by issuing a 6% note payable due in three months.

(d) On November 5, programs for 20 racing days in November, 25 racing days in December and 15 racing days in January were printed for $3,000.

(e) The accountant for the concessions company reported that gross receipts for November were $140,000. Ten percent is due to Heartland and will be remitted by December 10.

New Dawn Window Washing Inc. was started on May 1. Here is a summary of the May transactions.

1. Stockholders invested $20,000 cash in the company in exchange for common stock.

2. Purchased equipment for $9,000 cash.

3. Paid $700 cash for May office rent.

4. Paid $300 cash for supplies.

5. Purchased $750 of advertising in the Beacon News on account.

6. Received $7,200 in cash from customers for service.

7. Paid a $500 cash dividend.

8. Paid part-time employee salaries $1,700.

9. Paid utility bills $140.

10. Provided service on account to customers $1,000.

11. Collected cash of $650 for services billed in transaction (10).

(a) Prepare a tabular analysis of the transactions using these column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Common Stock, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends). Revenue is called Service Revenue. Include margin explanations for any changes in Retained Earnings. (b) From an analysis of the Retained Earnings columns, compute the net income or net loss for May.

The Rauzi Company is looking to replace an existing computer system with a new, more efficient system. They feel the new will increase cash flow.

The new system will cost $435,000 today and have a 4 year production life. It will be depreciated using 100% bonus depreciation with an estimated salvage value of $175,000 at the end of its production life. The project will also set aside $15,000 for working capital.

The old computer is currently two years old and had an estimated production life of six years. It originally cost $305,000 and was depreciated using 100% bonus depreciation. It could be sold for $150,000 today and we estimated that if kept, we would sell it for $25,000 at the end of its production life.

The new is estimated to produce revenue of $250,000 per year and have expenses of $75,000 per year (excluding taxes) for its production life. The old was expected to produce revenue of $135,000 per year and have expenses of $85,000 per year (excluding taxes) for its production life.

Rauzi has a 30% tax rate and requires a 20% return on this investment. Use NPV and determine if they should invest. SHOW ALL WORK!

(Please show work so I can understand how you got to the answer - Thank you very much )

Via Gelato is a popular neighborhood gelato shop. The company has provided the following data concerning its operations:

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 $5,700 plus $1.50 per liter of gelato sold and the actual wages for June were $14,560. Via Gelato expected to sell 6,000 liters in June, but actually sold 6,200 liters.

Required:

Complete the report showing 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.)