Alsup Consulting sometimes performs services for which it
receives payment at the conclusion of the engagement, up to six
months after services commence. Alsup recognizes service revenue
for financial reporting purposes when the services are performed.
For tax purposes, revenue is reported when fees are collected.
Service revenue, collections, and pretax accounting income for
2017–2020 are as follows:
| Service Revenue | Collections | Pretax Accounting Income |
|||||||
| 2017 | $ | 616,000 | $ | 581,000 | $ | 140,000 | |||
| 2018 | 700,000 | 710,000 | 205,000 | ||||||
| 2019 | 665,000 | 645,000 | 175,000 | ||||||
| 2020 | 650,000 | 675,000 | 155,000 | ||||||
There are no differences between accounting income and taxable
income other than the temporary difference described above. The
enacted tax rate for each year is 40%.
(Hint: You may find it helpful to prepare a schedule that shows the
balances in service revenue receivable at December 31,
2017–2020.)
Journal entry worksheet:
Record 2018 income taxes.
Record 2019 income taxes.
Record 2020 income taxes.
In: Accounting
Presented below is an income statement for Crane Company for the
year ended December 31, 2020.
| Crane
Company Income Statement For the Year Ended December 31, 2020 |
|||
| Net sales | $786,000 | ||
| Costs and expenses: | |||
| Cost of goods sold | 555,000 | ||
| Selling, general, and administrative expenses | 77,000 | ||
| Other, net | 30,000 | ||
| Total costs and expenses | 662,000 | ||
| Income before income taxes | 124,000 | ||
| Income taxes | 37,200 | ||
| Net income | $86,800 | ||
Additional information:
| 1. | "Selling, general, and administrative expenses" included a usual but infrequent charge of $8,000 due to a loss on the sale of investments. | ||
| 2. | "Other, net" consisted of interest expense, $10,000, and a discontinued operations loss of $20,000 before taxes. If the discontinued operations loss had not occurred, income taxes for 2020 would have been $43,200 instead of $37,200. | ||
| 3. | Crane had 20,000 shares of common stock outstanding during 2020. |
Using the single-step format, prepare a corrected income statement,
including the appropriate per share disclosures.
In: Accounting
Q7) Pearl Home Improvement Company installs replacement siding,
windows, and louvered glass doors for single-family homes and
condominium complexes. The company is in the process of preparing
its annual financial statements for the fiscal year ended May 31,
2020. Jim Alcide, controller for Pearl, has gathered the following
data concerning inventory.
At May 31, 2020, the balance in Pearl’s Raw Materials Inventory
account was $444,720, and Allowance to Reduce Inventory to NRV had
a credit balance of $27,340. Alcide summarized the relevant
inventory cost and market data at May 31, 2020, in the schedule
below.
Alcide assigned Patricia Devereaux, an intern from a local college,
the task of calculating the amount that should appear on Pearl’s
May 31, 2020, financial statements for inventory under the LCNRV
rule as applied to each item in inventory. Devereaux expressed
concern over departing from the historical cost principle.
|
Cost |
Sales Price |
Net Realizable Value |
||||
| Aluminum siding | $76,300 | $69,760 | $61,040 | |||
| Cedar shake siding | 93,740 | 102,460 | 92,432 | |||
| Louvered glass doors | 122,080 | 203,176 | 183,447 | |||
| Thermal windows | 152,600 | 168,732 | 152,600 | |||
| Total | $444,720 | $544,128 | $489,519 |
Incorrect answer iconYour answer is incorrect.
Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020.
| Balance in the Allowance to Reduce Inventory to NRV |
$ |
For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded (using the loss method) due to the change in Allowance to Reduce Inventory to NRV. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
| The amount of the gain (loss) |
$ |
In: Accounting
1. MIGITSU COMPANY
Comparative Balance Sheets
December 31
| Cash | $72,000 | $21,000 | ||||
| Accounts receivable | 87,000 | 77,000 | ||||
| Inventories | 168,000 | 190,000 | ||||
| Land | 70,000 | 99,000 | ||||
| Equipment | 262,000 | 202,000 | ||||
| Accumulated depreciation | (66,000) | (34,000) | ||||
| Total | $593,000 | $555,000 | ||||
| Liabilities and Stockholders’ Equity | ||||||
| Accounts payable | $35,000 | $45,000 | ||||
| Bonds payable | 151,000 | 208,000 | ||||
| Common stock ($1 par) | 218,000 | 176,000 | ||||
| Retained earnings | 189,000 | 126,000 | ||||
| Total | $593,000 | $555,000 |
Additional information:
1. Net income for 2020 was $97,000.
2. Cash dividends of $34,000 were declared and paid.
3. Bonds payable amounting to $57,000 were redeemed for cash $57,000.
4. Common stock was issued for $42,000 cash.
5. Equipment that cost $45,000 and had a book value of $27,000 was sold for $35,000 during 2020; land was sold at cost.
PART A. Prepare a statement of cash flows for 2020 using the indirect method.
PART B. Compute free cash flow
2.
2020 2019
Cash $14,900 $10,400
Accounts receivable. 21,500. 23,400
Land. 19,700 25,900
Buildings 70,100 70,100
Accumulated depreciation—buildings. (14,800) (10,700)
Total $111,400 $119,100
Accounts payable $12,100 $28,300
Common stock 75,400 73,600
Retained earnings 23,900 17,200
Total $111,400 $119,100
Additional information:
1. Net income was $22,400. Dividends declared and paid were $15,700
2. No noncash investing and financing activities occurred during 2020.
3. The land was sold for cash of $4,900.
PART A.) Prepare a statement of cash flows for 2020 using the indirect method.
PART B.) Compute free cash flow
In: Accounting
Martinez Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms.
1. Martinez Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $491. The standalone selling price of the tablet is $246 (the cost to Martinez Company is $166). Martinez Company sells the Internet access service independently for an upfront payment of $291. On January 2, 2020, Martinez Company signed 110 contracts, receiving a total of $54,010 in cash.
2. Martinez Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $589. Martinez Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $151. Martinez Company signed 210 contracts for Martinez Bundle B on July 1, 2020, receiving a total of $123,690 in cash.
Prepare any journal entries to record the revenue arrangement for Martinez Bundle A on January 2, 2020, and December 31, 2020.
|
(To record sales) |
|
(To record cost of goods sold) |
Prepare any journal entries to record the revenue arrangement for
Martinez Bundle B on July 1, 2020, and December 31, 2020.
|
(To record sales) |
|
(To record cost of goods sold) |
Repeat the requirements for part (a), assuming that Martinez
Company has no reliable data with which to estimate the standalone
selling price for the Internet service.
(To record sales)
|
(To record cost of goods sold) |
In: Accounting
Pharoah Home Improvement Company installs replacement siding,
windows, and louvered glass doors for single-family homes and
condominium complexes. The company is in the process of preparing
its annual financial statements for the fiscal year ended May 31,
2020. Jim Alcide, controller for Pharoah, has gathered the
following data concerning inventory.
At May 31, 2020, the balance in Pharoah’s Raw Materials Inventory
account was $456,960, and Allowance to Reduce Inventory to Market
had a credit balance of $28,300. Alcide summarized the relevant
inventory cost and market data at May 31, 2020, in the schedule
below.
Alcide assigned Patricia Devereaux, an intern from a local college,
the task of calculating the amount that should appear on Pharoah’s
May 31, 2020, financial statements for inventory at
lower-of-cost-or-market as applied to each item in inventory.
Devereaux expressed concern over departing from the historical cost
principle. Assume Garcia uses LIFO inventory costing.
|
Cost |
Replacement |
Sales Price |
Net Realizable |
Normal Profit |
||||||||||
| Aluminum siding | $78,400 | $70,000 | $71,680 | $62,720 | $5,712 | |||||||||
| Cedar shake siding | 96,320 | 88,928 | 105,280 | 94,976 | 8,288 | |||||||||
| Louvered glass doors | 125,440 | 138,880 | 208,768 | 188,496 | 20,720 | |||||||||
| Thermal windows | 156,800 | 141,120 | 173,376 | 156,800 | 17,248 | |||||||||
| Total | $456,960 | $438,928 | $559,104 | $502,992 | $51,968 | |||||||||
(a1) Determine the proper balance in Allowance to
Reduce Inventory to Market at May 31, 2020.
| Balance in the Allowance to Reduce Inventory to Market |
$ |
(a2) For the fiscal year ended May 31, 2020,
determine the amount of the gain or loss that would be recorded due
to the change in Allowance to Reduce Inventory to Market.
| The amount of the gain (loss) |
$ |
In: Accounting
As of January 1, 2020, the City of Summerhaven began a municipal bus operation. The adjusted trial balance below was prepared as of December 31, 2020:
Debits Credits
Cash $ 45,000 $
Investments 85,000
Supplies 20,000
Restricted Assets 30,000
Land 100,000
Land Improvements 200,000
Accumulated Depreciation-Land Improvements 10,000
Building 400,000
Accumulated Depreciation-Building 20,000
Buses 500,000
Accumulated Depreciation-Buses 50,000
Accounts Payable 45,000
Salaries Payable 15,000
Interest Payable 10,000
General Obligation Bonds Payable 800,000
Other Financing Sources-transfer in 400,000
Revenues—charges for services 360,000
Dividend and interest income 10,000
Fuel and Supplies Expense 60,000
Salaries Expense 120,000
Utilities Expense 50,000
Depreciation Expense 80,000
Interest Expense 30,000 _________
Totals $1,720,000 $1,720,000
Additional information:
Ø A transfer of $400,000 was received from the general fund in January, 2020, and was used to acquire capital assets.
Ø General obligation bonds with a face value of $800,000 were sold for $800,000 on March 31, 2020. The bonds pay interest at 5% on March 31 and September 30. The bonds were used to acquire capital assets.
Ø The bond indenture requires that Summerhaven set aside assets for the payment of bond principal. The general obligation bonds are serial bonds, and the first serial payment will not be paid until 2023. Restricted assets consist entirely of investments.
3 Prepare the statement of net position at December 31, 2020.
4 Prepare the capital and related financing activities section of the statement of cash flows for the year ended December 31, 2020.
Please help with problems 3 and 4
In: Accounting
Taco Company installs replacement siding, windows, and louvered
glass doors for single-family homes and condominium complexes. The
company is in the process of preparing its annual financial
statements for the fiscal year ended May 31, 2020. Jim Alcide,
controller for Taco, has gathered the following data concerning
inventory.
At May 31, 2020, the balance in Headland’s Raw Materials Inventory
account was $461,040, and Allowance to Reduce Inventory to Market
had a credit balance of $29,040. Alcide summarized the relevant
inventory cost and market data at May 31, 2020, in the schedule
below.
Alcide assigned Burger, an intern from a local college, the task of
calculating the amount that should appear on Taco’s May 31, 2020,
financial statements for inventory at lower-of-cost-or-market as
applied to each item in inventory. Burger expressed concern over
departing from the historical cost principle. Assume Burger uses
LIFO inventory costing.
|
Cost |
Replacement |
Sales Price |
Net Realizable |
Normal Profit |
||||||||||
| Aluminum siding | $79,100 | $70,625 | $72,320 | $63,280 | $5,763 | |||||||||
| Cedar shake siding | 97,180 | 89,722 | 106,220 | 95,824 | 8,362 | |||||||||
| Louvered glass doors | 126,560 | 140,120 | 210,632 | 190,179 | 20,905 | |||||||||
| Thermal windows | 158,200 | 142,380 | 174,924 | 158,200 | 17,402 | |||||||||
| Total | $461,040 | $442,847 | $564,096 | $507,483 | $52,432 | |||||||||
(a1) Determine the proper balance in Allowance to
Reduce Inventory to Market at May 31, 2020.
| Balance in the Allowance to Reduce Inventory to Market |
$ |
(a2) For the fiscal year ended May 31, 2020,
determine the amount of the gain or loss that would be recorded due
to the change in Allowance to Reduce Inventory to Market.
| The amount of the gain (loss) |
In: Accounting
On April 1, 2020, Larkspur Inc. entered into a cost plus fixed fee non-cancellable contract to construct an electric generator for Blue Spruce Corporation. At the contract date, Larkspur estimated that it would take two years to complete the project at a cost of $2,440,000. The fixed fee stipulated in the contract was $549,000. Larkspur appropriately accounts for this contract under the percentage-of-completion method. During 2020, Larkspur incurred costs of $976,000 related to this project. The estimated cost at December 31, 2020, to complete the contract is $1,464,000. Blue Spruce was billed $732,000 under the contract. The billings are non-refundable.
(a)
Correct answer iconYour answer is correct.
Calculate the amount of gross profit to be recognized by Larkspur under the contract for the year ended December 31, 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
| Gross profit / (loss) | $ |
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(b)
Show how the contract will be reported on the income statement for the year ended December 31, 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
|
LARKSPUR INC. Partial Income Statement Quarter Ended December 31, 2020Year Ended December 31, 2020Month Ended December 31, 2020 |
||
| $ | ||
| select a summarizing line for the first part ExpensesNet Income / (Loss)Total RevenuesGross Profit / (Loss)Total ExpensesRevenuesOther Expenses and LossesOperating ExpensesIncome from OperationsDividends | $ | |
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In: Accounting
Assume all of the same facts as in Part I, except that Soccer Inc. uses the percent of receivables or "aging of receivables" method to determine bad debt expense. I will repeat the facts for your convenience: Soccer Inc. had credit sales of $775,000 during 2020. At the end of 2020, the unadjusted ending balance in Soccer’s Allowance for Bad Debt account was $7,600, and the unadjusted balance in its gross accounts receivable account was $239,000. The company has a policy of writing-off any Account Receivable which is outstanding more than 75 days. As of 12/31/20, Soccer has Accounts Receivable balances totaling $2,000 outstanding over 75 days which need to be written off.
Soccer has created the following aging schedule:
|
Age of Receivables |
Gross Receivables |
Probability of Collection |
|
0 – 15 days |
$100,000 |
99% |
|
16 – 45 days |
$75,000 |
97% |
|
46 – 60 days |
$25,000 |
90% |
|
61 – 75 days |
$37,000 |
75% |
|
76 days and Over |
$2,000 |
0% |
You may round your answers to the nearest dollar.
(A) What journal entry would Soccer record to "Write-Off" Accounts Receivable?
(B) What journal entry would Soccer record to recognize 2020 Bad Debt Expense?
(C) What is the adjusted 12/31/2020 balance of Soccer's Gross Accounts Receivable? **(Show calculation)**
(D) What is the adjusted 12/31/2020 balance of Soccer's Allowance for Bad Debt? **(Show calculation)**
(E) What is the adjusted 12/31/2020 balance of Soccer's Net Accounts Receivable? **(Show calculation)**
In: Accounting