All questions within this problem relate to GoodFellas Inc a construction company.Extract from the trial balance of GoodFellas at 31. December 2019 (EUR)DebitCreditCosts of services provided320,000Contracts in progress700,000Interest expense21,000Sales and administrative expenses120,000Impairment losses13,000Sales revenue680,000Interest income6,000Required:i.Define revenue and expenses in accordanwith IAS 1 Presentation of financial statenments |Explain how the recognition of revenue at a construction company is different from that of a manufacturingcompany (according to the IFRS).On 15 January 2020 the accounting department at GoodFellas learned that by 31 December the company hadcompleted 80% of a construction contract. The expenses associated with the contract had been accounted for, butnot the revenue. The client had made no payments under the contract. Explain how this event should be treatedii.iii.under IAS 10 Events after the balance sheet date.GoodFellas entered a lease contract for a digger machine on the 2nd of January 2019. The machine could havebeen bought outright for €60,000. Under the lease contract GoodFellas paid €10,000 on the 2nd of January 2019,and then will need to pay €20,000 on the 2nd of January 2020, 2013 and 2014. The effective rate implicit in thelease is 9.7%. The lease was at first treated as an operating lease and the first payment was included in expenses(under cost of services provided), but it became clear later that the lease is in fact a finance lease: Explain howiv.this transaction should be treated in the financial statements for the year ended 31. December 2019 withoutproviding the amounts. Calculate the total amount that should be recognised as a liability on the 2nd of January2019.Refer to the transaction described in (iv) above. (A). Calculate the finance charge for the year ended31. December 2019 (B). Explain the treatment of the transaction (including the amounts) for the followingyear, that is year ended 31. December 2020.On the 1st of Februrary 2019 GoodFellas entered a 3-year construction contract to build an ice cream factory. Thebudgeted revenue is €i,200,000 with costs budgeted at €800,000. By 31. December 2019 €700,000 of the totalcontract costs had been incurred and recorded as "contract in progress". No revenue has so far been recorded invi.the accounts. Explain the accounting treatment and calculate the amounts related to the contract thatneed to be included in the statement of financial position for the year ended 31. December 2019. The client hasso far transferred progress payments to the total amount of €500,000.vii. GoodFellas pays corporate income tax at a flat rate of 21% of income before tax. However, income on constructioncontracts (questions 1g and 1h) is taxed when cash is received from the client. The client has so far paid €500,000since the start of the contract in February 2019. Explain the treatment of the tax on construction contractrevenue. Calculate current tax, the amount of tax liability and deferred tax. .Refer to all the questions above and make appropriate adjustments to the trial balance (excepts i, ii, i & iv).Prepare the statement of income for the year ended 31. December 2019 on the basis of the trial balance andthe questions above. At a minimum write the form of the statement of income with corresponding amounts fromviii.the trial balance.

Name: All questions within this problem relate to GoodFellas Inc a construc
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: All questions within this problem relate to GoodFellas Inc a construction company.Extract from the trial balance of GoodFellas at 31. December 2019 (EUR)DebitCreditCosts of services provided320,000Contracts in progress700,000Interest expense21,000Sa

Revenue refers to the money or profit earned by an entity or a company through its business…

Business

Accounting

tract from the trial balance of GoodFellas at 31. December 2019 (EUR) Debit Credit Costs of services provided 320,000 Conracts in progress 700,000 Interest expense 21,000 Sales and administrative expenses 120,000 Impairment losses 13,000 Sales revenue 680,000 Interest income 6,000 quired: i. Define revenue and expenses in accordance with IAS 1 Presentation of financial statements

tract from the trial balance of GoodFellas at 31. December 2019 (EUR) Debit Credit Costs of services provided 320,000 Conracts in progress 700,000 Interest expense 21,000 Sales and administrative expenses 120,000 Impairment losses 13,000 Sales revenue 680,000 Interest income 6,000 quired: i. Define revenue and expenses in accordance with IAS 1 Presentation of financial statements

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

Chapter3: Review Of A Company's Accounting System

Section: Chapter Questions

Problem 11E: Worksheet for Service Company Whitaker Consulting Company has prepared a trial balance on the...

See similar textbooks

Similar questions

Kling Company was organized in late 2019 and began operations on January 2, 2020. Prior to the start of operations, it incurred the following costs: Required: 1. What amount should the company expense in 2019? In 2020? 2. Next Level What is the justification of the accounting treatment of these costs?
Spreadsheet The following 2019 information is available for Payne Company: Partial additional information: The net income for 2019 totaled 1,600. During 2019, the company sold, for 390, equipment that cost 390 and had a book value of 300. The company sold land for 200, resulting in a loss of 40. The remaining change in the Land account resulted from the purchase of land through the issuance of common stock. Required: Making whatever additional assumptions that are necessary, prepare a spreadsheet to support the 2019 statement of cash flows for Payne.
In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.
Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services accounting clerk prepared the following unadjusted trial balance at July 31, 2019: The data needed to determine year-end adjustments are as follows: Depreciation of building for the year, 6,400. Depreciation of equipment for the year, 2,800. Accrued salaries and wages at July 31, 900. Unexpired insurance at July 31, 1,500. Fees earned but unbilled on July 31, 10,200. Supplies on hand at July 31, 615. Rent unearned at July 31, 300. Instructions 1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. 2. Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.
Worksheet Victoria Company has the following account balances on December 31, 2019, prior to any adjustments: Additional adjustment information: (a) depreciation on buildings, 1,100; on equipment, 600; (b) bad debts expense, 240; (c) interest accumulated but not paid: on note payable, 50; on mortgage payable, 530 (this interest is due during the next accounting period); (d) insurance expired, 175; (e) salaries accrued but not paid 370; (f) rent was collected in advance and the performance obligation is now satisfied, 800; (g) office supplies cm hand at year-end, 230 (expensed when originally purchased earlier in the year); and (h) the income tax rate is 30% on current income and is payable in the first quarter of 2020. Required: 1. Transfer the account balances to a 10-column worksheet and prepare a trial balance. 2. Prepare the adjusting entries in the general journal and complete the worksheet. 3. Prepare the companys income statement, retained earnings statement, and balance sheet. 4. Prepare closing entries in the general journal.
Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2019, follows: The following business transactions were completed by Valley Realty during August 2019: Aug. 1. Purchased office supplies on account, 3,150. 2.Paid rent on office for month, 7,200. 3.Received cash from clients on account, 83,900. 5.Paid insurance premiums, 12,000. 9.Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, 400. Analyzing Transactions Aug. 17. Paid advertising expense, 8,000. 23.Paid creditors on account, 13,750. Enter the following transactions on Page 19 of the two-column journal: 29.Paid miscellaneous expenses, 1,700. 30.Paid automobile expense (including rental charges for an automobile), 2,500. 31.Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, 2,000. 31.Paid salaries and commissions for the month, 53,000. 31.Recorded revenue earned and billed to clients during the month, 183,500. 31.Purchased land for a future building site for 75,000, paying 7,500 in cash and giving a note payable for the remainder. 31.Withdrew cash for personal use, 1,000. 31.Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of 5,000. Instructions 1. Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of August 31, 2019. 5. Assume that the August 31 transaction for Cindy Getmans cash withdrawal should have been 10,000. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?
Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2019, follows: The following business transactions were completed by Elite Realty during April 2019: Apr. 1. Paid rent on office for month, 6,500. 2.Purchased office supplies on account, 2,300. 5.Paid insurance premiums, 6,000. 10.Received cash from clients on account, 52,300. 15.Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17.Paid creditors on account, 6,450. 20.Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23.Paid advertising expense, 4,300. Enter the following transactions on Page 19 of the two-column journal: 27.Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28.Paid automobile expense (including rental charges for an automobile), 1,500. 29.Paid miscellaneous expenses, 1,400. 30.Recorded revenue earned and billed to clients during the month, 57,000. 30.Paid salaries and commissions for the month, 11,900. 30.Withdrew cash for personal use, 4,000. 30.Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1. Record the April 1, 2019, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of April 30, 2019. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?
Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows: Required: 1. Compute the gross profit or loss recognized in 2019 and 2020. 2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.
At the end of 2019, Framber Company received 8,000 as a prepayment for renting a building to a tenant during 2020. The company erroneously recorded the transaction by debiting Cash and crediting Rent Revenue in 2019 instead of 2020. Upon discovery of this error in 2020, what correcting journal entry will Framber make? Ignore income taxes.
Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800
Worksheet for Service Company Whitaker Consulting Company has prepared a trial balance on the following partially completed worksheet for the year ended December 31, 2019: Additional information: (a) On January 1, 2019, the company had paid 2 years rent in advance at 100 a month for office space, (b) the office equipment is being depreciated on a straight-line basis over a 10-year life, and no residua! value is expected, (c) interest of 150 has accrued on the note payable but has not been paid, and (d) the income tax rate is 30% on current income and will be paid in the first quarter of 2020. Required: 1. Complete the worksheet. 2. Prepare financial statements for 2019.
Prince Corporations accounts provided the following information at December 31, 2019: What should be the current balance of retained earnings? a. 520,000 b. 580,000 c. 610,000 d. 670,000