Multistep income statement and balance sheet LO 7-1, 7-5 Use the following information to prepare a multi-step income statement and a balance sheet for Sherman Equipment Co. for Year 2. (Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated.) (Balance Sheet only: Items to be deducted must be indicated with a minus sign.) Salaries Expense $ 70,000 Operating Expenses $ 63,000 Common Stock 100,000 Cash Flow from Investing Activities 79,400 Notes Receivable (short term) 25,000 Prepaid Rent 12,600 Allowance for Doubtful Accounts 7,900 Land 41,000 Uncollectible Accounts Expense 8,200 Cash 48,200 Supplies 1,300 Inventory 98,400 Interest Revenue 5,500 Accounts Payable 47,000 Sales Revenue 324,000 Salaries Payable 13,000 Dividends 3,600 Cost of Goods Sold 149,000 Interest Receivable (short term) 1,600 Accounts Receivable 57,000 Beginning Retained Earnings 81,500

SHERMAN EQUIPMENT CO.Balance SheetAs of December 31, Year 2AssetsTotal assetsLiabilities and Stockholders’ EquityCurrent LiabilitiesTotal LiabilitiesStockholders’ EquityTotal Stockholders’ EquityTotal Liabilities and Stockholders’ Equity

(a) The following information relates to Bank HSBC. Prepare the profit & loss account for the year ended 31/12/2018. ( 8 mark)

Provide for statutory reserve 25% and transfer OMR 12,000 to general reserve.

(b) Calculate the net premium to be credited to Revenue a/c from the following data (1 mark)

Premium during the year end               OMR1,600,000

Reinsurance premium paid                    OMR 540,000

Reinsurance premium received              OMR 620,000

Bonus in reduction of premium (not yet adjusted)     OMR 20,000

(C)Compute the net commission to be debited to the revenue account, from the following information. (1mark)

Commission on direct business                 OMR 93,000

Commission on reinsurance accepted       OMR 40,000

Commission on reinsurance ceded             OMR 50,000

Divisional Income Statements and Return on Investment Analysis

E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows:

The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.

Required:

1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.

2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. Round your answers to one decimal place.

Although Goldman Sachs paid Heather $90,000.00 per year, she was not satisfied with her job. She had loved going white-water rafting and skiing with her family in Utah since she was a little girl. So last year, she decided to open her own business: Family Adventures. During the summer, she takes families on different white-water trips, and in the winter, she leads clients on skiing trips. To start her business, Heather borrowed $100,000 from a bank and used $70,000.00 of her savings. Her savings earned 10% interest. At the end of the year, she wanted to know whether her new business venture was worthwhile. The table below lists her total revenue and itemized costs for Family Adventures.

1st attempt

Part 1   (0.5 point)

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Family Adventures' accounting profit was $   .

Part 2   (0.5 point)

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Family Adventures' economic profit was $   . (If the economic profit is less than zero, be sure to include the - sign.)

Genesis Physical Therapy has been providing outpatient physical therapy services for 30 years. The owners, Jesse and Janice, have been slow to implement updated technology for the accounting system because it is costly. However, at the beginning of the current year, they decided to install a new patient revenue system. It is an off-the-shelf product that is marketed to the healthcare industry. The auditor asked one of Genesis’ accounting staff for feedback about the new system. The staff member provided the following comments:

Evaluate the audit risks associated with the new patient revenue system.

Alibaba Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold, and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 1,800 pizzas at an average selling price of $15 per pizza and for 220 deliveries.

Data concerning the pizzeria’s actual results in November appear below:  

Required:

Compute the revenue and spending variances for the pizzeria for November. (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.)

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 1,560 pizzas at an average selling price of $15 per pizza and for 220 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Compute the revenue and spending variances for the pizzeria for November. (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.)

"A firm is considering purchasing a new milling machine and has collected the following information for its income statement and cash flow statement. However, this income statement was calculated as if there is no inflation! All dollars are expressed in constant (year-0) dollars. Recalculate the income and cash flow statement by assuming there is a general (average) inflation of 2.6% applied to revenue, O&M, and salvage value.
- The firm will pay back the loan in 2 years, and the annual loan payment is $26,571.
- The tax rate is 38%.
- The revenue for year 1 is $40,000 and $36,000 for year 2.
- O&M for year 1 is $8,000 and $11,000 for year 2.
- The interest paid on the debt is $2743 for year 1 and $1409 for year 2.
- The taxable income is $19,111 for year 1 and $14,897 for year 2.
- The income taxes are $7,262 for year 1 and $5,661 for year 2.
- The milling machine costs $71,000.
- The salvage value at the end of year 2 is $48,000.
Calculate the IRR of the cash flow based on actual dollars. Express your answer as a percentage between 0 and 100.
You should calculate the depreciation based on the information given in the problem, but do not refer to the MACRS table. You will also need to calculate the amount that is borrowed and that goes to the principal on the debt in years 1 and 2."

Lance, the owner of Onya Bikes, informs you that he has completed all adjusting journal entries. He provides the following adjusted ledger balances for the year ended 31 December 2020.

Required:

Prepare/answer the following:

a. An Income Statement for the year ended 31 December 2020. (Classification of expenses not required) (8 marks)

b.  A Statement of Changes in Equity for the year ended 31 December 2020.

c. A classified Balance Sheet as at 31 December 2020.