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3.1.3
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- Problem 3.7 The Oakland Mills Company has disclosed the following financial information in its annual reports for the period ending March 31, 2011: sales of $1,438,049, costs of goods sold of $658,116.42, depreciation expenses of $175,000, and interest expenses of $89,575. Assume that the firm has a tax rate of 35 percent. What is the company's net income? Set up an income statement to answer the question. (Round answers to 2 decimal places, e.g. 15.25)Question 3 In summary, event 3 leads to a decrease in cash and a decrease in debt on the balance sheet as well as a decrease in profit on the income statement. On the other hand, event 4 leads to an increase in income and the availability of accounts receivable on the balance sheet, as well as an increase in profit on the income statement. On March 25, Thelma will book and pay wages to the employees at Systrarnas Fastighetsbyrå. You have the following information about wages for the month of March: Gross wages: SEK 500,000 Personnel tax: 33% Employer's tax: 31.42% 1. a) Give an account of how gross wages affect profit and cash on March 25 due to the transactions that take place then. Use the terms result, cost and access in your answer. Justify your answer and link it to concrete numbers in the scenario. 2. b) Explain how cash and cash equivalents are affected on April 12 by the total payments made due to March wages on this date. Justify your answer and link the answer to concrete…multiple choice question The business hires an office manager at $700 a week. The immediate effect on the accounting equation is to: increase equity by $700 and decrease the asset cash by $700. decrease the asset cash by $700 and decrease equity by $700. no effect as this is not a business transaction. increase wages by $700 and decrease equity by $700.
- Question 1:Uno Pizza Store started the year with total assets of $150,000 and total liabilities of $85,000. During the year, the business recorded $175,000 in revenues, $90,000 in expenses, and dividends of $10,000. The net income reported by Uno Pizza for the year wasa. $75,000b. $85,000c. $65,000d. $175,000Question 2: If the beginning balance in the retained earnings was $30,000, what will the ending balance of the retained earning be? Question 3: What was the total capital stock at the beginning of the year? Question 4:What will the amount of the total assets be at the end of the year?Question 5: Fatima Company compiled the following financial information as of December 31, 2013:Revenues $140,000Common Stock 45,000Equipment 40,000Accumulated depreciation on equipment 15,000Expenses 60,000Cash 35,000Dividends 20,000Supplies 5,000Accounts payable 20,000Accounts receivable 15,000Retained earnings, 1/1/13 50,000Fatima’s stockholders’ equity on December 31,2013 is:a. $105,000b.…Item 5 Stacey's Piano Rebuilding Company has been operating for one year. At the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash $6,900 Accounts payable $9,100 Accounts receivable 30,400 Unearned revenue 3,140 Supplies 1,450 Long-term note payable 47,300 Equipment 9,700 Common stock 1,720 Land 7,500 Additional paid-in capital 6,880 Building 26,600 Retained earnings 14,410 Rebuilt and delivered five pianos in January to customers who paid $18,500 in cash. Received a $570 deposit from a customer who wanted her piano rebuilt. Rented a part of the building to a bicycle repair shop; received $880 for rent in January. Received $7,500 from customers as payment on their accounts. Received an electric and gas utility bill for $450 to be paid in February. Ordered $960 in supplies. Paid $1,440 on account in January. Received from the home of Stacey Eddy, the major shareholder, a $940 tool…(ii) Prepare the Income Statement and Balance Sheet taking into consideration:1. Closing Stock as on 31st March is 200,000.2. Salary outstanding for the month of March is 30,000.3. Depreciation@10% to be charged on Furniture & Fixtures and @15% on Plant & Machinery.
- Brief Exercise 1-24 The Accounting Equation Financial information for three independent cases is as follows: The liabilities of Dent Company are $82,000, and its stockholders' equity is $120,000. What is the amount of Dents total assets? The total assets of Wayne Inc. are $55,000, and its stockholders' equity is $22,500. What is the amount of Waynes total liabilities? Gordon Companys total assets increased by $60,000 during the year, and its liabilities decreased by $35,000. Did Gordons stockholders' equity increase or decrease? By how much? Required: Determine the missing amount for each case.Brief Exercise 1-23 Business Activities Marni Restaurant Company engaged in the following transactions during March, its first month of operations. Received $100,000 cash from the sale of stock. Purchased of $20,000 inventory from J&J Wholesale Company. Purchased $30,000 of kitchen equipment for its restaurants. Obtained a $25,000 loan from First State Bank. Sold $18,000 of food to customers. paid employee weekly salaries of $8,500. Repaid S 10,000 of principal relating to the loan in Item d. Required: For each of the above business activities, indicate whether it is an operating, investing, or financing activity.Exercise 3-38 Accrual- and Cash-Basis Expense Recognition The following information is taken from the accrual accounting records of Kroger Sales Company: During January, Kroger paid $9,150 for supplies to in sales to customers during the next 2 months (February and March). The supplies will be used evenly over the next 2 months. Kroger pays its employees at the end of each month for salaries earned during that month. Salaries paid at the end of February and March amounted to $4,925 and $5,100, respectively. Kroger placed an advertisement in the local newspaper during March at a cost of $850. The ad promoted the pre-spring sale during the last week in March. Kroger did not pay for the newspaper ad until mid-April. Required: Under cash-basis accounting, how much exvxn.se should Kroger report for February and March? Under accrual-basis accounting, how much expense should Kroger report for February and March? CONCEPTUAL CONNECTION Which basis of accounting provides the most useful information for decision-makers? Why?
- Brief Exercise 2-30 Transaction Analysis Galle Inc. entered into the following transactions during January. Borrowed $50,000 from First Street Bank by signing a new payable. Purchased $25,000 of equipment for cash. (Continued) Paid $500 to landlord for rent for January. Performed services for customers on account, $10,000. Collected $31000 from customers for services performed in Transaction d. Paid salaries of $2,500 for the current month. Required: Show the effect of each transaction using the following model.Case 4-70 CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT Over the next 2 months, Front Row Entertainment continued to enjoy success in signing artists and promoting their events. However, the increased business has put considerable stress on keeping timely and up-to-date financial records. In particular, both Cam and Anna are concerned with the accounting and management of the companys cash. The tour promotion industry is a cash-intensive industry, normally requiring large prepayments to secure venues and arrange advertising. When the number of artists under contract were small, Cam and Anna developed a simple system to manage the companys cash. Normally, any cash received was put in a file cabinet in the companys office. If the amount appeared to be getting large, a deposit was made. Similarly, if a large check needed to be written, either Cam or Anna would check the balance in the checkbook. If cash was not sufficient to cover the check, they'd get cash from the file cabinet and deposit the amount necessary to cover the check. However, with the increasing business, they would often forget to make deposits, causing several checks to be returned for non-sufficient funds. In addition, they were in the process of hiring additional office staff who would start work on May l. They knew that leaving cash in a file cabinet would not be a good idea. In order to obtain a better understanding of their cash position, Anna decides to perform a bank reconciliation-something she had failed to do since the company was started. According to the accounting records, the cash balance at April 30 was $7,495. Anna obtained the following information from Front Rows April bank statement and an analysis of canceled checks and deposits: Balance per bank at April 30 $3,250 Deposits in transit at April 30 4,370 Outstanding checks as of April 30 1,160 Debit memo for April utilities 845 Bank service charge for April 50 Interest earned during April 450 NSF check from customer 590 Required: CONCEPTUAL CONNECTION Discuss the purpose Of an internal control System. How would the development of an internal control system benefit Front Row Entertainment? In your answer, be sure to highlight any problems that you noted with Front Row Entertainments current system of accounting for cash.Comprehensive Problem 1 8 Net income. 31,425 Kelly Pitney began her consulting business. Kelly Consulting, on April 1, 20Y8. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter During May, Kelly Consulting entered into the following transactions: May 3.Received cash from clients as an advance payment for services to be provided and recorded it as unearned tree 4,500 5.Received cash from clients on account 2,450. 9.Paid cash for a newspaper advertisement 225. 13.Raid Office Station Co for part of the debt incurred on April , 640. 15.Recorded services provided on account for the period May 1-15, 9,180. 16 Paid part-time receptionist for two weeks salary including the amount owed on April 30, 750. 17.Recorded cash from cash clients for fees earned during the period May 116, 8,360. Record the following transactions on Page 6 of the Journal 20.Purchased support on account 735. 21.Recorded services provided on account for the period May 1620. 4,820 25.Recorded cash from cash clients for fees earned for the period May 1723, 7,900 27.Received cash from clients on account 9,520. 28.Paid part-time receptionist for two weeks salary. 7S0. 30.Raid telephone bill for May. 260 31.Paid electricity bill for May, 810. 31.Recorded cash from cash clients tor lees earned for the period May 2031. 3,300. 31.Recorded services provided on account for the remainder of May, 2,650. 31.Paid dividends 10,500 Instructions 1.The chart of accounts foe Kelly Consulting is shown us Exhibit 9. and the post-closing trial balance as of April 30, 20Y8, is shown in Exhibit 17. for each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1. 20Y8. and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting cm Page of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 5.Prepare an unadjusted trial balance. 4.At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (a)Insurance expired during May is 275. (b)Supplies on hand on May II are 715. (c)Depreciation of office equipment for May is 330. (d)Accrued receptionist salary on May 31 is 325. (e)Rent expired during May is 1600. (f)Unearned fees on May 31 are 3,210 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of stockholders equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.
