How much is SYDNEY's consulting revenues under the accrual basis of accounting? SYDNEY Consultants maintains its accounting records using the pure cash basis of accounting. During 2021, SYDNEY collected P1,590,000from its clients and paid P877,000 in operating expenses. At December 31, 2020 and 2021, the following account balances were obtained:December 31, 2021December 31, 2020Professional fees receivableUnearned professional feesPrepaid operating expensesAccrued operating expenses297,500245,000112,500127,30099,500107,800111,40097,300

Under accrual basis of accounting, revenue should be recognized when the right to receive it has…

Answered: consulting revenues under the accrual…

Business

Accounting

consulting revenues under the accrual basis of accounting

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 14DQ

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In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.
Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.
Cash Receipts from Customers Singleton Inc. had accounts receivable of $22,150 at January 1, 2019, and $26,850 at December 31, 2019. Net income for 2019 was $125,300 and sales revenue was $1,240,000. Required: Compute the amount of cash collected from customers using the direct method.
West End Inc., an auto mechanic shop, has the following account balances, given in no certain order, for the quarter ended March 31, 2019. Based on the information provided, prepare West Ends annual financial statements (omit the Statement of Cash Flows). Prepare West Ends annual financial statements. (Omit the Statement of Cash Flows.)
Determining Cash Flows from Financing Activities Solomon Construction Company reported the following amount on its balance sheet at the end of 2019 and 2018 for notes payable: Required: 1. If Solomon did not repay any notes payable during 2019, determine how much cash Solomon received from the issuance of notes payable. 2. If Solomon repaid $40,000 of notes payable during 2019, determine what amounts Solomon would report in the financing activities section of the statement of cash flows.
Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800
To demonstrate the difference between cash account activity and accrual basis profits (net income), note the amount each transaction affects cash and the amount each transaction affects net income. A. issued stock for cash $20,000 B. purchased supplies inventory on account $1,800 C. paid employee salaries; assume it was current days expenses $950 D. paid note payment to bank (principal only) $1,200 E. collected balance on accounts receivable $4,750
Selected information from Brook Corporations accounting records and financial statements for 2019 follows: On the statement of cash flows for the year ended December 31, 2019, Brook should disclose a net increase in cash in the amount of: a. 1,700,000 b. 2,400,000 c. 3,700,000 d. 4,200,000
Cromwell Company has the following trial balance account balances, given in no certain order, as of December 31, 2018. Using the information provided, prepare Cromwells annual financial statements (omit the Statement of Cash Flows).
It is February 16, 2020, and you are auditing Davenport Corporation's financial statements for 2019 (which will be issued in March 2020). You read in the newspaper that Travis Corporation, a major customer of Davenport, is in financial difficulty. Included in Davenports accounts receivable is 50,000 (a material amount) owed to it by Travis. You approach Jim Davenport, president, with this information and suggest that a reduction of accounts receivable and recognition of a loss for 2019 might be appropriate. Jim replies, Why should we make an adjustment? Ted Travis, the president of Travis Corporation, is a friend of mine; he will find a way to pay us, one way or another. Furthermore, this occurred in 2020, so lets wait and see what happens; we can always make an adjustment later this year. Our 2019 income and year-end working capital are not that high; our creditors and shareholders wouldnt stand for lower amounts than they already are. Required: From financial reporting and ethical perspectives, prepare a response to Jim Davenport regarding this issue.
Five Incorporated maintains its accounting records using the cash basis but presents financial basis using the accrual method. For the year 2021, Five reported cash basis income of 532,000. Other information are as follows: Accounts Receivable, January 1 300,000 Accounts Receivable, December 31 150,000 Accounts Payable, January 1 400,000 Accounts payable, December 31 320,000 What is the accrual basis net income?