Domestic Nutty Productions Incorporated generated service revenue of $30,000 and income from operations of $10,000. The companyestimates that, had it extended credit, it would have instead generated $60,000 of service revenue, but it would have incurred$25,000 of additional expenses for wages and bad debts.Required:1-a. Using these estimates, calculate the amount by which Income from Operations would increase (decrease).1-b. Should the company extend credit?Complete this question by entering your answers in the tabs below.Req 1AReq 1BUsing these estimates, calculate the amount by which Income from Operations would increase (decrease).Income from Operations wouldby< Req 1AReq 1B >

Step 1: Facts Increase in sales = New revenue - Old revenueIncrease in sales = $60,000 -…

Answered: Nutty Productions Incorporated…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter2: Analysis Of Financial Statements

Section: Chapter Questions

Problem 6PROB

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Bolitho Company is a service firm. It established a Deferred Revenue account because prepayments are required for its services. It also uses an Accrued Expense account to record billings of operating expenses.• The Deferred Revenue account had a balance of P670,000 on January 1. Total credits to this account during the year is P8,714,000. Its ending balance increased to P978,000 at yearend.• The Accrued Expense account had a balance of P421,000 on January 1. Total debits to this account during the year is P3,417,000 during the year. Its ending balance decreased by P120,000. How much is the net income during the year? How much is the total liabilities as of yearend? How much is the net cash flow during the year? [Indicate whether it is an inflow or outflow.]
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Below are the Profit and Loss Statement and Balance Sheet for the business after 12 months of operations. Kane needs your help to check and prepare the corrected Profit and Loss Statement. Profit and Loss Statement as at 31 December 2021 $ $ $ Course Fees Revenue 25,700 Unearned Revenue 4,000 Sales Revenue 105,500 135,200 Less: Cost of Goods Sold 43,000 Gross Profit 92,200 Less: Operating Expense Selling Expense Salaries Expense (refer to Note 1) 55,000 Accrued Expense 1,000 56,000 General and Administrative Expense Salesmen Commission 15,500 Interest Expense 2,750 Roadshow Expense 19,000 Depreciation – Office Equipment 10,000 47,250 Financial Expense Prepaid Expense 13,100…

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