A. Differentiate between revenue expenditure and capital expenditure

B. Classify the following transactions as revenue (Income) or capital in nature?

1. Sale of manufactured paints.

2. Contract to provide services to repair dilapidated building.

3. Purchase of raw material to manufacture garments.

4. Construction of a warehouse to house finished goods for distribution.

5. Proceeds of an insurance policy covering loss of profits for damage done to the business premises because of a fire.

6. Repairs of 90% of business complex that was damaged by fire

7. Removal of wooden partition and replacing it with concrete wall

8. Used car dealer replace his fleet of locally manufactured cars with imported SUVs’

Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers

Transactions related to revenue and cash receipts completed by Crowne Business Services Co. during the period April 2–30 are as follows:

Required:

1. Insert the following balances in the general ledger as of April 1:

After completing the recording of the transactions in the journals in part 3, total each of the columns of the special journals, and post the individual entries and totals to the general ledger. Insert account balances after the last posting. When posting to the general ledger, post in chronological order. However, if there is more than one entry on the same date, be sure to post transactions from the revenue journal before posting transactions from the cash receipts journal.

If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

2. Insert the following balances in the accounts receivable subsidiary ledger as of April 1:

After completing the recording of the transactions in the journals in part 3, post to the accounts receivable subsidiary ledger in chronological order, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer's account before recording a cash receipt. If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees.

4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for April. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer’s account before recording a cash receipt.

5. Total each of the columns of the special journals and post the individual entries and totals to the general ledger. Insert account balances after the last posting.

If an amount box does not require an entry, leave it blank.

6. What is the sum of the customer balances?
$

Does the sum of the customer balances agree with the accounts receivable controlling account in the general ledger?
   

7. Would an automated system omit postings to a controlling account as performed in step 5 for Accounts Receivable?

In the Trade Talks: When is Tariff Revenue Bad Tax Revenue? excerpts we discussed in class, Dr. Lucie Gadenne discussed the differences between rich and poor countries in regard to tariff use and revenue. Explain how the two types of countries differ in their use and reliance on tariffs. Then explain the recommendation they make for poor countries that would like to open up to free trade. Simplify in 2 sentences.

6. Explain the relationship between the elasticity and total revenue. (Remember Total Revenue = Price x Quantity Sold)

11. After economic class one day, your friend suggests that taxing tobacco would be a good way to raise revenue. In what sense is taxing tobacco a "good" way to raise revenue? In what sense is it not a "good" way to raise revenue?

Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers

Transactions related to revenue and cash receipts completed by Crowne Business Services Co. during the period April 2–30 are as follows:

Required:

1. Insert the following balances in the general ledger as of April 1:

After completing the recording of the transactions in the journals in part 3, total each of the columns of the special journals, and post the individual entries and totals to the general ledger. Insert account balances after the last posting. When posting to the general ledger, post in chronological order. However, if there is more than one entry on the same date, be sure to post transactions from the revenue journal before posting transactions from the cash receipts journal.

If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Revenue Journal begins with “R”. For example journal/ Cash Receipts/ Revenue Journal, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

2. Insert the following balances in the accounts receivable subsidiary ledger as of April 1:

After completing the recording of the transactions in the journals in part 3, post to the accounts receivable subsidiary ledger, in chronological order and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer's account before recording a cash receipt.

If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Revenue Journal begins with “R”. For example journal/ Cash Receipts/ Revenue Journal, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees.

4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for April. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer’s account before recording a cash receipt.

5. Total each of the columns of the special journals and post the individual entries and totals to the general ledger. Insert account balances after the last posting.

If an amount box does not require an entry, leave it blank.

Does the sum of the customer balances agree with the accounts receivable controlling account in the general ledger?
   

7. Would an automated system omit postings to a controlling account as performed in part (5) for Accounts Receivable?

review this list of the four types of adjustments: Prepaid Expense, Unearned Revenue, Accrued Revenue, Accrued Expense Then, follow these steps to participate in the discussion forum: Please select one type of adjustment. Define the term giving a detailed explanation. Provide a specific adjusting journal entry and explain it.

1. In the Trade Talks: When is Tariff Revenue Bad Tax Revenue? excerpts we discussed in class, Dr. Lucie Gadenne discussed the differences between rich and poor countries in regard to tariff use and revenue. Explain how the two types of countries differ in their use and reliance on tariffs. Then explain the recommendation they make for poor countries that would like to open up to free trade.

2. In a scenario where producers face concentrated benefits and consumers face dispersed losses, why might government representatives choose a trade policy that harms overall (total) national welfare? Hint: think of our blue jeans example (select one)

1. Using the following cost and revenue information for Prestige Worldwide (PWW), determine how the costs, revenue, and cash flow items would be affected by the possible exchange rate scenarios for the pound: (1) £ = $1.20, (2) £= $1.25, and (3) £= $1.30. Would Prestige Worldwide be favorably or unfavorably affected by a weakening pound? Why? Explain. Assume that U.S. sales will be unaffected by the exchange rate. Also, assume that £ earnings will be remitted to the U.S. parent at the end of the period. Lastly, ignore possible tax effects.

Please simply complete the table below (populate the table with the USD cash flows for each account under each scenario). You may instead choose to insert a copy of an Excel generated table below – however, if you decide to use Excel, I require you to turn in an electronic copy of your spreadsheet (in addition to pasting the table into the quiz). Failure to do both (paste table into quiz and turn in spreadsheet) will constitute an incomplete answer. (30 points).

The revenue and cost information for Odessa Outfitters inc. for 2015 follows:

Sales Revenue       560,000

COGS (at standart) 342,000

DM price variance      1,000 F

DM quantity variance 6,000 F

DL rate varinace          4,000U

DL efficiency variance 2,000 F

Overhead controllable variance 3,500U

Overhead volüme variance    8,000f

a)What is gross profit at standard?

b)What is gross profit actual?

c)Write journal entries for all variance accounts assuming all units are produced and sold in the same period.