The revenue and expense accounts of Branchly. Enterprises are shown below: Revenue Year 1 100 000 Еxpanses Year 1 65 000 Financial statements were prepared at the end of the fiscal period. The net income was $35 000. The accountant quit after preparing the statements and a new accountant began work in the new.ve.ar. At the end of the second year, the accounts appear as summarized below: Revenue Year 1 100 000 Year 2 140 000 Total 240000 Expenses Year 1 65 000 Year 2_90 000 Total 155000 Financial statements prepared at the end of the second year indicated a net income of $85 000. The owner thought this was too good to be true. The owner was right! a. Why is the $85 000 net income figure incorrect? [2] b. What is the correct net income for the second year? Show your work. [1]
The revenue and expense accounts of Branchly. Enterprises are shown below: Revenue Year 1 100 000 Еxpanses Year 1 65 000 Financial statements were prepared at the end of the fiscal period. The net income was $35 000. The accountant quit after preparing the statements and a new accountant began work in the new.ve.ar. At the end of the second year, the accounts appear as summarized below: Revenue Year 1 100 000 Year 2 140 000 Total 240000 Expenses Year 1 65 000 Year 2_90 000 Total 155000 Financial statements prepared at the end of the second year indicated a net income of $85 000. The owner thought this was too good to be true. The owner was right! a. Why is the $85 000 net income figure incorrect? [2] b. What is the correct net income for the second year? Show your work. [1]
Chapter14: Corporation Accounting
Section: Chapter Questions
Problem 11PB: You are the accountant for Trumpet and Trombone Manufacturing, Inc. and you oversee the preparation...
Related questions
Question
I have to complete this for practice exam(homework). it says the question is graded but its not actually not it just says that because its a part of an old rycycled test from a few years back that the teachers use.
![The revenue and expense accounts of Branchly. Enterprises are shown below:
Revenue
Year 1 100 000
Expenses
Year 1 65 000
Financial statements were prepared at the end of the fiscal period. The net income
was $35 000. The accountant quit after preparing the statements and a new
accountant began work in the new.xear. At the end of the second year, the accounts
appear as summarized below:
Revenue
Year 1 100 000
Year 2 140 000
Total 240000
Expenses
Year 1 65 000
Year 2 90 000
Total 155000
Financial statements prepared at the end of the second year indicated a net income
of $85 000. The owner thought this was too good to be true. The owner was right!
a. Why is the $85 000 net income figure incorrect? [2]
b. What is the correct net income for the second year? Show your work. [1]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F63d7f6f2-0261-49a2-932c-44fea86c2aca%2F4df475b0-3641-4b5b-87a5-ca5d845b47cf%2F13vnktr_processed.png&w=3840&q=75)
Transcribed Image Text:The revenue and expense accounts of Branchly. Enterprises are shown below:
Revenue
Year 1 100 000
Expenses
Year 1 65 000
Financial statements were prepared at the end of the fiscal period. The net income
was $35 000. The accountant quit after preparing the statements and a new
accountant began work in the new.xear. At the end of the second year, the accounts
appear as summarized below:
Revenue
Year 1 100 000
Year 2 140 000
Total 240000
Expenses
Year 1 65 000
Year 2 90 000
Total 155000
Financial statements prepared at the end of the second year indicated a net income
of $85 000. The owner thought this was too good to be true. The owner was right!
a. Why is the $85 000 net income figure incorrect? [2]
b. What is the correct net income for the second year? Show your work. [1]
![Sarah Lin owns a business. She decides to sell the business and offers it to you
for $50 000 cash. You will own all the assets and liabilities. Lin provides the
following information:
Assets
Debit
Credit
Cash
$4 000
Accounts Receivable
3 500
Supplies
3 000
Equipment
50 000
Accumulated Depreciation-Equipment
Delivery Van
Accumulated Depreciation-Van
$24 400
38 000
24 966
Liabilities
Accounts Payable
Bank Loan (1 year)
5 000
12 000
Sarah states the business is worth more than $50 000 since the car and equipment
cost a total of $88 000.
a. What is the owner's equity in this business? Show your work. [2]
b. What is the book value of the van and equipment? Show your work. [2]
c. What do you think is a fair selling price based only on the figures
provided? What two other pieces of information would you like to see to
help you determine afair selling price? [3]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F63d7f6f2-0261-49a2-932c-44fea86c2aca%2F4df475b0-3641-4b5b-87a5-ca5d845b47cf%2Fsj8ls76_processed.png&w=3840&q=75)
Transcribed Image Text:Sarah Lin owns a business. She decides to sell the business and offers it to you
for $50 000 cash. You will own all the assets and liabilities. Lin provides the
following information:
Assets
Debit
Credit
Cash
$4 000
Accounts Receivable
3 500
Supplies
3 000
Equipment
50 000
Accumulated Depreciation-Equipment
Delivery Van
Accumulated Depreciation-Van
$24 400
38 000
24 966
Liabilities
Accounts Payable
Bank Loan (1 year)
5 000
12 000
Sarah states the business is worth more than $50 000 since the car and equipment
cost a total of $88 000.
a. What is the owner's equity in this business? Show your work. [2]
b. What is the book value of the van and equipment? Show your work. [2]
c. What do you think is a fair selling price based only on the figures
provided? What two other pieces of information would you like to see to
help you determine afair selling price? [3]
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage