24a) The interior of thew building is renovated, extending the useful life of the building by 10 years. Is this a revenue expenditure or a capital expenditure? Type in 1 for revenue expenditure or type in 2 for a capital expenditure.
24b) A cleaning firm is paid $150 per week to clean the carpets in a building. Is this a revenue expenditure or a capital expenditure? Type in 1 for revenue expenditure or type in 2 for a capital expenditure.
24c) On which financial statement if Loss in Disposal of Plant assets recorded? Type in 1 for income statement; type in 2 for statement of retained earnings; type in 3 for balance sheet.
24d) When an exchange of similar plant assets is said to have "commercial substance", what does that mean?
In: Accounting
1) For a monopoly, marginal revenue is less than price
because
A) the demand for the firm's output is downward sloping.
B) the firm has no supply curve.
C) the firm can sell all of its output at any price.
D) the demand for the firm's output is perfectly elastic.
2) The monopoly maximizes profit by setting
A) price equal to marginal cost.
B) price equal to marginal revenue.
C) marginal revenue equal to marginal cost.
D) marginal revenue equal to zero.
3) The ability of a monopoly to charge a price that exceeds
marginal cost depends on A) the price elasticity of supply.
B) price elasticity of demand.
C) slope of the demand curve.
D) shape of the marginal cost curve.
In: Economics
The following comparative income statement (in thousands of dollars) for the two recent fiscal years was adapted from the annual report of Speedway Motorsports, Inc., owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways.
|
1 |
Current Year |
Previous Year |
|
|
2 |
Revenues: |
||
|
3 |
Admissions |
$116,034.00 |
$130,239.00 |
|
4 |
Event-related revenue |
151,562.00 |
163,621.00 |
|
5 |
NASCAR broadcasting revenue |
192,662.00 |
185,394.00 |
|
6 |
Other operating revenue |
29,902.00 |
26,951.00 |
|
7 |
Total revenue |
$490,160.00 |
$506,205.00 |
|
8 |
Expenses and other: |
||
|
9 |
Direct expense of events |
$101,402.00 |
$106,204.00 |
|
10 |
NASCAR purse and sanction fees |
122,950.00 |
120,146.00 |
|
11 |
Other direct expenses |
18,908.00 |
20,352.00 |
|
12 |
General and administrative |
183,215.00 |
241,223.00 |
|
13 |
Total expenses and other |
$426,475.00 |
$487,925.00 |
|
14 |
Income from continuing operations |
$63,685.00 |
$18,280.00 |
| A. | Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Enter all amounts as positive numbers. Rounding instructions (Note: Due to rounding, amounts may not total 100%). |
| B. | Comment on the significant changes. |
Income Statement
Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Enter all amounts as positive numbers. Rounding instructions (Note: Due to rounding, amounts may not total 100%).
|
Speedway Motorsports, Inc. |
|
Comparative Income Statement (in thousands of dollars) |
|
For the Years Ended December 31 |
|
1 |
Current Year |
Current Year |
Previous Year |
Previous Year |
|
|
2 |
Amount |
Percent |
Amount |
Percent |
|
|
3 |
Revenues: |
||||
|
4 |
Admissions |
$116,034.00 |
$130,239.00 |
||
|
5 |
Event-related revenue |
151,562.00 |
163,621.00 |
||
|
6 |
NASCAR broadcasting revenue |
192,662.00 |
185,394.00 |
||
|
7 |
Other operating revenue |
29,902.00 |
26,951.00 |
||
|
8 |
Total revenue |
$490,160.00 |
100.0% |
$506,205.00 |
100.0% |
|
9 |
Expenses and other: |
||||
|
10 |
Direct expense of events |
$101,402.00 |
$106,204.00 |
||
|
11 |
NASCAR purse and sanction fees |
122,950.00 |
120,146.00 |
||
|
12 |
Other direct expenses |
18,908.00 |
20,352.00 |
||
|
13 |
General and administrative |
183,215.00 |
241,223.00 |
||
|
14 |
Total expenses and other |
$426,475.00 |
$487,925.00 |
||
|
15 |
Income from continuing operations |
$63,685.00 |
$18,280.00 |
Final Question
Comment on the significant changes.
While overall revenue some between the two years, the overall mix of revenue sources did change somewhat. The NASCAR broadcasting revenue as a percent of total revenue by almost 2.6 percentage points, while the percent of admissions revenue to total revenue by 2 percentage points. Overall, it appears that income from continuing operations has significantly improved because of
In: Accounting
Below is the post-closing trial balance of Gracie Consultancy Services as at 30 June 2019:
|
Debit $ |
Credit $ |
|
|
Cash at bank |
38250 |
|
|
Accounts receivable |
8250 |
|
|
Equipment |
40500 |
|
|
Accumulated depreciation - Equipment |
675 |
|
|
Accounts payable |
14250 |
|
|
Wages payable |
4500 |
|
|
Revenue received in advance |
2625 |
|
|
Gracie, Capital |
|
64950 |
|
87000 |
87000 |
The following transactions occurred during the month July 2019.
|
July |
1 |
Paid employee salaries, $4500 for June. Gracie pays her employees’ accrued salaries on the first day of each calendar month. |
|
8 |
Invoiced customers for consultancy services performed, $13100. |
|
|
14 |
Performed $1125 of services for customers who paid in advance in June for consultancy services to be performed in July. |
|
|
15 |
Paid $8100 for 4 months office building rent. |
|
|
25 |
Gracie redrew capital of $1800. |
|
|
31 |
Purchased office supplies on account for $1350. |
Required
a) Journalise the transactions, including narrations.
b) Prepare an unadjusted trial balance as at 31 July 2019. (Total 20 Marks)
a)
|
General Journal |
|||
|
Date |
Account name and narration |
Debit $ |
Credit $ |
b)
|
Gracie Consultancy Services |
||
|
Trial balance |
||
|
as at 31 July 2019 |
||
|
Account name |
Debit $ |
Credit $ |
In: Accounting
| Core Constructions Company | ||||
| Trial Balance | ||||
| for the Month Ending December 31, 2019 | ||||
| Account Title | Debit | Credit | ||
| 100-Cash | 600 | |||
| 101-Accounts Receivable | 300 | |||
| 102-Supplies | 12,500 | |||
| 103-Prepaid Rent | 24,000 | |||
| 150-Computer (Cost) | 125,000 | |||
| 151-Accumulated Depreciation | 1,500 | |||
| 200-Accounts Payable | 200 | |||
| 201-Unearned Revenue | 60,000 | |||
| 202-Salaries & Wages Payable | 0 | |||
| 300-Owner's Capital | 35,600 | |||
| 301-Owner's Drawings | 5,500 | |||
| 400-Sales Revenue | 200,000 | |||
| 500-Telephone Expense | 3,600 | |||
| 601-Salaries & Wages Expense | 125,800 | |||
| 650-Supplies Expense | 0 | |||
| 750-Depreciation Expense | 0 | |||
| 790-Rent Expense | 0 | |||
| 297,300 | 297,300 | |||
| Adjustments: | ||||
| 1. The Supplies balance on December 31st is $5,500. | ||||
| 2. The Prepaid Rent is for 24-months | ||||
| 3. December depreciation expense is $500. | ||||
| 4. $40,000 of Unerned Revenue was used up in December. | ||||
| 5. Receipts for services completed in December for $15,000 was | ||||
| collected on January 4, 2020. | ||||
| 6. The December 2019 telephone bill for $300 was received and | ||||
| paid on January 5, 2020. | ||||
| 7. The weekly salary for $6,000 will be paid on Friday, January 2nd. | ||||
| Please write in the Diagonal Box the balances for the following: | ||||
| a. Salaries & Wages Payable | ||||
| b. Net Profit | ||||
| (Please do not show your work, only the answer) | ||||
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
$4,240,000. 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 | $ | 363,000 | $ | 2,688,000 | $ | 4,534,000 | |||||
| Estimated costs to complete | 3,267,000 | 1,792,000 | 0 | ||||||||
| Billings to Axelrod, to date | 724,000 | 2,250,000 | 4,240,000 | ||||||||
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, 2021, 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 $5,020,000. The building was completed on December 31, 2023. 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 12-31-2021 At 12-31-2022 At 12-31-2023 Percentage of completion 10 % 60 % 100 % Costs incurred to date $ 376,000 $ 3,234,000 $ 5,457,000 Estimated costs to complete 3,384,000 2,156,000 0 Billings to Axelrod, to date 737,000 2,510,000 5,020,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 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 2021 and 2022 as either cost in excess of billings or billings in excess of costs. Please help me solve this problem!
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
$5,020,000. 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 | $ | 376,000 | $ | 3,234,000 | $ | 5,457,000 | |||||
| Estimated costs to complete | 3,384,000 | 2,156,000 | 0 | ||||||||
| Billings to Axelrod, to date | 737,000 | 2,510,000 | 5,020,000 | ||||||||
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, 2021, 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
$4,480,000. The building was completed on December 31, 2023.
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 12-31-2021 | At 12-31-2022 | At 12-31-2023 | |||||||||
| Percentage of completion | 10 | % | 60 | % | 100 | % | |||||
| Costs incurred to date | $ | 367,000 | $ | 2,856,000 | $ | 4,818,000 | |||||
| Estimated costs to complete | 3,303,000 | 1,904,000 | 0 | ||||||||
| Billings to Axelrod, to date | 728,000 | 2,330,000 | 4,480,000 | ||||||||
Required:
1. Compute gross profit or loss to be recognized as a
result of this contract for each of the three years. Curtiss
concludes that the contract does not qualify for revenue
recognition over time.
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 2021 and 2022 as either
cost in excess of billings or billings in excess of costs.
In: Accounting
On July 1, 2018, Gupta Corporation bought 30% of the outstanding
common stock of VB Company for $170 million cash. At the date of
acquisition of the stock, VB’s net assets had a total fair value of
$490 million and a book value of $220 million. Of the $270 million
difference, $50 million was attributable to the appreciated value
of inventory that was sold during the last half of 2018, $160
million was attributable to buildings that had a remaining
depreciable life of 10 years, and $60 million related to equipment
that had a remaining depreciable life of 5 years. Between July 1,
2018, and December 31, 2018, VB earned net income of $60 million
and declared and paid cash dividends of $50 million.
Required:
1. Prepare all appropriate journal entries related
to the investment during 2018, assuming Gupta accounts for this
investment by the equity method.
2. Determine the amounts to be reported by Gupta.
(amounts in millions)
| Journal | Debit | Credit | |
| 1 | Investment in VB Shares | 170m | |
| Cash | 170m | ||
| 2 | Investment in VB Shares | ??? | |
| Investment Revenue | ??? | ||
| 3. | Cash | 15m | |
| Investment in VB Shares | 15m | ||
| 4 | Investment Revenue | ??? | |
| Investment in VB Shares | ??? |
| a Investment in Gupta's balance sheet | |
| b. investment revenue (loss) in Gupta's 2018 income statement | |
| c. investing activities in Gupta's 2018 statement of cash flows |
In: Accounting