Mullins Corp., a start‑up company, uses the accrual accounting method. In Year 1, Mullins provided services that were acceptable to its customers and billed those customers for $620,000. However, Mullins collected only $520,000 cash in Year 1, and the remaining $100,000 was collected in Year 2. Mullins’ employees earned $300,000 in Year 1 wages that were not paid until the first week of Year 2. Based only on this information, how much net income does Mullins report for Year 1?

Mullins Corp., a start‑up company, uses the accrual accounting method. In Year 1, Mullins provided services that were acceptable to its customers and billed those customers for $620,000. However, Mullins collected only $520,000 cash in Year 1, and the remaining $100,000 was collected in Year 2. Mullins’ employees earned $300,000 in Year 1 wages that were not paid until the first week of Year 2. Based only on this information, how much net income does Mullins report for Year 1?

PAYROLL ACCT.,2019 ED.(LL)-TEXT

19th Edition

ISBN:9781337619783

Author:BIEG

Publisher:BIEG

Chapter5: Unemployment Compensation Taxes

Section: Chapter Questions

Problem 5PB

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Mullins Corp., a start‑up company, uses the accrual accounting method. In Year 1, Mullins provided services that were acceptable to its customers and billed those customers for $620,000. However, Mullins collected only $520,000 cash in Year 1, and the remaining $100,000 was collected in Year 2. Mullins’ employees earned $300,000 in Year 1 wages that were not paid until the first week of Year 2. Based only on this information, how much net income does Mullins report for Year 2?
Cude Corp., a start‑up company, uses the accrual basis of accounting. In Year 1, Cude provided services that were acceptable to its customers and billed those customers for $620,000. However, Cude collected only $520,000 cash in Year 1, and the remaining $100,000 was collected in Year 2. Cude’s employees earned $300,000 in Year 1 wages that were not paid until the first week of Year 2. Based only on this information, how much net income does Cude report for Year 2?
Solomon Company started year 2 with $90,000 in its cash and common stock accounts. During year 2 Solomon paid $67,500 cash for employee compensation. Assume this is the only transaction that occurred in year 2. Required Determine the total amount of assets at the end of year 2, assuming Solomon is a manufacturing company and the employees were paid to make products. Determine the amount of expense recognized on the year 2 income statement, assuming Solomon is a manufacturing company and the employees were paid to make products. Determine the total amount of assets at the end of year 2, assuming Solomon is a service company. Determine the amount of expense recognized on the year 2 income statement, assuming Solomon is a service company.
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200 July 7 Purchased supplies on account from Little Company, $1,000. July 10 Paid employee salaries, $3,500 July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $8,000 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $9,000 July 31 Declared and paid cash…
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200 July 7 Purchased supplies on account from Little Company, $1,000. July 10 Paid employee salaries, $3,500 July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $8,000 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $9,000 July 31 Declared and paid cash…
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200 July 7 Purchased supplies on account from Little Company, $1,000. July 10 Paid employee salaries, $3,500 July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $8,000 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $9,000 July 31 Declared and paid cash…
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200 July 7 Purchased supplies on account from Little Company, $1,000. July 10 Paid employee salaries, $3,500 July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $8,000 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $9,000 July 31 Declared and paid cash…
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200 July 7 Purchased supplies on account from Little Company, $1,000. July 10 Paid employee salaries, $3,500 July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $8,000 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $9,000 July 31 Declared and paid cash…
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions. July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock. July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200 July 7 Purchased supplies on account from Little Company, $1,000. July 10 Paid employee salaries, $3,500 July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due. July 15 Received cash for preparing tax returns for the first half of July, $8,000 July 19 Made payment on account to Lake Company, $500. July 31 Received cash for preparing tax returns for the last half of July, $9,000 July 31 Declared and paid cash…
P is a sole proprietor whose accounting records are incomplete. All the sales are cash sales and during the year $50,000 was banked, including $5,000 from the sale of a business car. He paid $12,000 wages in cash from the till and withdrew $2,000 per month as drawings. The cash in the till at the beginning and end of the year was $300 and $400 respectively. What was the value of P’s sales revenue for the year? A $80,900 B $81,000 C $81,100 D $86,100
On March 1, the Applewood Corporation wanted to purchase a $475,000 piece of equipment, but Applewood was only able to furnish $161,500 of its own cash to purchase the equipment. Applewood borrowed the remainder of the $475,000 from the People’s National Bank on a 2-year, 5.5% note. Required: If the company keeps its records on a calendar year, what adjusting entry should Applewood make on December 31? If an amount box does not require an entry, leave it blank. When required, round your answers to the nearest dollar. Dec. 31 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 (Record accrued interest expense)
Wishbone, Inc., is preparing its year-end balance sheet and needs to determine how much of its assets/liabilities are current or noncurrent. For the following transactions, determine the amount that needs to be included in the balance sheet for the period ending December 31, Year 7, as current or noncurrent. Wishbone paid $16,000 for insurance on October 1, Year 6. Insurance is $500 per month due on the last day of the month. Wishbone pays its employees the Wednesday following the close of the 2-week pay period. Wishbone has 15 employees who each work 40 hours per week for $10 per hour. In Year 7, December 31 is the second Friday of a 2-week pay period. Wishbone has a $10,000 deferred tax asset recorded on its books as of December 31, Year 7. Wishbone expects $3,000 to be reversed in Year 8. During Year 7, Wishbone invested $6,000 in trading securities. It expects to sell half in Year 8 and the remaining half in Year 9. Wishbone purchased new equipment for $15,000 on January 1, Year…