During 2020, Bramble Co. generated revenues of $102000. The company’s expenses were as follows: cost of goods sold of $41000, operating expenses of $16000 and a loss on the sale of equipment of $2700. Bramble’s gross profit is $42300. $45000. $102000. $61000.

During 2020, Bramble Co. generated revenues of $102000. The company’s expenses were as follows: cost of goods sold of $41000, operating expenses of $16000 and a loss on the sale of equipment of $2700. Bramble’s gross profit is $42300. $45000. $102000. $61000.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 1RE: Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of...

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Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of goods sold was 240,000, its operating expenses were 50,000, its interest revenue was 2,000, and its interest expense was 12,000. Brandts income tax rate is 30%. Prepare Brandts multiple-step income statement for the current year.
Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?
During 2020, Raines Umbrella Corp. had sales of $940, 000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $680,000, $85,000, and $165,000, respectively. In addition, the company had an interest expense of $53, 000 and a tax rate of 21 percent. (Assume that interest is fully deductible.) a. What was the company's net income or net loss for 2020? (Do not round intermediate calculations. Input your answer as a positive value.) b. What was its operating cash flow? (Do not round intermediate calculations.)
The net sales of JEY Company in 2019 is ₱580,000. The cost of goods manufactured is ₱480,000. The beginning inventories of goods in process and finished goods are ₱82,000 and ₱65,000, respectively. The ending inventories are: goods in process –₱75,000; finished goods –₱55,000. The selling expenses and general and administrative expenses are 5% and 2.5% of cost of sales, respectively. How much would be the net profit before tax in the year 2019? 45,725 ₱ 53,250 ₱ 90,000 ₱ 83,000
The profit or loss section of the statement of comprehensive income of Reek Company for the year ended December 31, 2020 is reproduced below: Sales P 6,100,000 Cost of goods sold 3,700,000 Gross profit P2,400,000 Gain on sale of equipment 100,000 Salaries expense -820,000 Insurance expense -380,000 Depreciation expense 220,000 Profit before interest and income tax P1,080,000 Interest expense 120,000 Profit before income tax P960,000 Income tax expense 288,000 Profit P672,000 The following information is also available: Decrease in accounts receivable P120,000 Increase in inventory 280,000 Decrease in accounts payable 160,000 Increase in salaries payable 100,000 Increase in prepaid insurance 180,000 Decrease in interest payable 30,000 Increase in income tax payable 18,000 Required: Prepare Reek Company’s 2020 Statement of Cash Flows using the direct method and Indirect Method.
Quantum and Time company is engaged in merchandising business. During the year 2020, the company generated a net income of 45 million. In the process it incurred depreciation of 3 million & amortization of 2 million, while accounts receivables increased by 2 million, inventory decreased by 3 million and trade payables increased by 2 million. It reported total assets, total current liabilities, and total non-current liabilities of 200million, 50 million and 75 million respectively as on the balance sheet date. Calculate the CFROI of the company based on the given information.
SABM Co. reported net income of P2,100,000 for 2020 . It incurred operating expenses other than interest expense , at 40% of cost of sales but only 20% of sales. Interest expense is 5% of sales. Purchases is 120% of cost of sales and ending inventory is twice the beginning inventory. If the company is subject to 30% income tax, how much is the company's sales for the year? *
GHIST Co. reported a net income of P2,100,000 for 2020. It incurred operating expenses other than interest expense, at 40% of cost of sales but only 20% of sales. Interest expense is 5% of sales. Purchases is 120% of the cost of sales and ending inventory is twice the beginning inventory. If the company is subject to 30% income tax, how much is the company's sales for the year? *a. P10,000,000b. P12,000,000c. P15,000,000d. P18,000,000e. answer not given
ABC Company prepared the following income statement for the year 2020: Sales P6,000,000 Cost of goods sold (2,800,000) Gross Income P3,200,000 Gain on sale of equipment 100,000 Total Income P3,300,000 Operating expenses (500,000) Casualty loss (300,000) Income before tax P 2,500,000 Income tax- 30% 750,000 Net Income P1,750,000 Third quarter…