Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 2DYS
Hamilton Hawks Players’ Association and Mr. Sideline, the CEO and majority owner of Hamilton Hawks Soccer, Inc, ask your help in resolving a salary dispute. Mr. Sideline presents the following income statement to the players’ representatives.
| HAMILTON HAWKS SOCCER, INC. Income Statement |
||
| Ticket revenues | $ 3,500,000 | |
| Stadium rent expense | $2,500,000 | |
| Ticket expense | 30,000 | |
| Promotion expense | 80,000 | |
| Player salaries | 700,000 | |
| Staff salaries and miscellaneous | 265,000 | 3,575,000 |
| Net income (loss) | $ (75,000) | |
The players contend that their salaries are below market and a raise is warranted. Mr. Sideline argues that the Hamilton Hawks really lose money and, until ticket revenues increase, a salary hike is out of the question.
As a result of your inquiry, you discover that Hamilton Hawks Soccer Company owns 85 percent of the voting stock in Hawks Stadium, Inc. This venue is specifically designed for soccer and is where the Hawks play their entire home game schedule. However, Mr. Sideline does not wish to consider the profits of Hawks Stadium in the negotiations with the players. He claims that “the stadium is really a separate business entity that was purchased separately from the team and therefore does not concern the players. On top of that, we allocate all the ticket revenues to the team’s income statement.”
The Hawks Stadium income statement appears as follows:
| HAWKS STADIUM, INC. Income Statement |
||
| Stadium rent revenue | $2,500,000 | |
| Concession revenue | 875,000 | |
| Parking revenue | 95,000 | $3,470,000 |
| Cost of goods sold | 270,000 | |
| 90,000 | ||
| Grounds maintenance expense | 410,000 | |
| Staff salaries and miscellaneous | 200,000 | 970,000 |
| Net income (loss) | $2,500,000 | |
Required
- 1. What advice would you provide the negotiating parties regarding the issue of considering the Hawks Stadium income statement in their discussions? What authoritative literature could you cite in supporting your advice?
- 2. What other pertinent information would you need to provide a specific recommendation regarding players’ salaries?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Sam Winchstone operates a concrete repair business. His condensed income statement for fiscal December 31, 2021 is shown below:
Sales $202,000
Cost of Goods Sold (89,000)
Gross Profit 113,000
Operating Expenses (41,000)
Employee Bonus (8,000)
Convention Costs (6,200)
Loss on Sale of Assets (3,400)
Net Income $54,400
Other Information:
1. Operating expenses include a $3,000 penalty to a customer for a delay in completing a contract, $6,500 in amortization expense, a $4,500 golf membership for Sam that he uses mainly for clients and $2,600 in meals and entertainment costs.
2. Operating expenses also include $25,000 in wages to his 15 year old brother, Dean. Dean came in on Saturdays to help file paperwork. Sam could have hired an experienced adult from a temporary agency for $4,000. Dean was the only employee for the business for the year.
3. The employee bonus will be paid to Sam on January 31, 2022.
4. Sam travelled to Montreal to attend the Canadian Home Renovators convention where he…
XYZ Company is a landscaping service. In July, they provided $30,000 of services for several customers and billed them. During January, they received $25,000 from their customers for services performed. Employees clocked 500 hours of work and had earned $6,000 of wages. During July, XYZ had paid their employees $5,000. What is their income using cash basis income measurement?
Group of answer choices
$25,000
$20,000
$19,000
$24,000
Tar Heel Corporation provides the following information at the end of 2021. Salaries payable to workers at the end of the year $ 3,300 Advertising expense for the year 10,400 Building that has been purchased 80,000 Supplies at the end of the year 4,600 Retained earnings 40,000 Utility expense for the year 6,000 Note payable to the bank 25,000 Service revenue earned during the year 69,400 Salary expense for the year 26,700 Accounts payable to suppliers 7,700 Dividends paid to shareholders during the year ( ? ) Common stock that has been issued, including $6,000 that was issued this year 27,000 Cash remaining 5,200 Interest expense for the year 2,100 Accounts receivable from customers 13,200 Retained earnings at the beginning of the year 26,800 Required: Prepare the income statement, statement of stockholders’ equity, and balance sheet for Tar Heel Corporation on December 31, 2021.
Chapter 5 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Angela, Inc., holds a 90 percent interest in Corby...Ch. 5 - Prob. 8PCh. 5 - Thomson Corporation owns 70 percent of the...Ch. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Akron, Inc., owns all outstanding stock of Toledo...Ch. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Following are financial statements for Moore...Ch. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Hamilton Hawks Players Association and Mr....
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.Similar questions
- Your company just hired a Junior Financial analyst with a net salary of 18,000 Dh / month. The company agreed to offer a retirement scheme for the employee, where both the employer and employee contribute 6% of the gross salary to CIMR (Retirement scheme). Prepare a payslip indicating: 1. Gross Salary 2. CNSS (Social Security): both employee and employer shares 3. AMO (Mandatory insurance): both employee and employer shares 4. CIMR (Retirement scheme): both employee and employer shares 5. What is the total cost incurred by the company?arrow_forwardXYZ Company is a landscaping service. In July, they provided $30,000 of services for several customers and billed them. During July, they received $25,000 from their customers for services performed. Employees clocked 500 hours of work and had earned $6,000 of wages. During July, XYZ had paid their employees $5,000. What is their income using accrual-based income measurement? Group of answer choices $25,000 $24,000 $20,000 $30,000arrow_forwardBroke Corp. reports operating expenses in two categories (1) selling and (2) general administrative. The adjusted trial balance at December 31, 2021, including the following expenses: Accounting and legal fees 120,000 Advertising 150,000 Freight-out 80,000 Interest 70,000 Loss on sale of long-term investment 30,000 Officers’ salaries 225,000 Rent for office space 220,000 Sales salaries and commissions 140,000One-half of the rented space is occupied by the Sales Department. How much is Broke’s…arrow_forward
- Norma Smith is the controller of Baylor Corporation and is responsible for the preparation of the year-end financial statements. The following transactions occurred during the year. a. On December 20, 2020, a former employee filed a legal action against Baylor for $100,000 for wrongful dismissal. Management believes the action to be frivolous and without merit. The likelihood of payment to the employee is remote. b. Bonuses to key employees based on net income for 2020 are estimated to be $150,000. c. On December 1, 2020, the company borrowed $600,000 at 8% per year. Interest is paid quarterly. d. Accounts receivable at December 31, 2020, is $10,000,000. An aging analysis indicates that Baylor’s expense provision for doubtful accounts is estimated to be 3% of the receivables balance. e. On December 15, 2020, the company declared a $2.00 per share dividend on the 40,000 shares of common stock outstanding, to be paid on January 5, 2021. f. During the year, customer…arrow_forwardSpades Company provided the following information for the year ended December 31, 2022: Sales 8,000,000Sales salaries 520,000Advertising 120,000Indirect labor 600,000Delivery expense 160,000Freight in 80,000Depreciation – machinery 50,000Factory taxes 130,000Purchases 1,600,000Direct labor 1,480,000Factory supplies expense 120,000Office supplies expense 30,000Office salaries 800,000Factory superintendence 480,000Doubtful accounts 100,000Factory maintenance 150,000Factory heat, light and power 220,000Income tax expense 170,000 Doubtful accounts are common costs allocated to administrative expenses and selling expense equally. Inventory balancesat the end of the fiscal period as compared with balances at the beginning of the fiscal period were as follows: Finished goods 200,000 IncreaseGoods in process 90,000 IncreaseRaw materials 100,000 Decrease Tax rate is 30%. 1. What is the amount of cost of goods sold for the current period?2. What is the amount of general and administrative…arrow_forwardSpades Company provided the following information for the year ended December 31, 2022: Sales 8,000,000Sales salaries 520,000Advertising 120,000Indirect labor 600,000Delivery expense 160,000Freight in 80,000Depreciation – machinery 50,000Factory taxes 130,000Purchases 1,600,000Direct labor 1,480,000Factory supplies expense 120,000Office supplies expense 30,000Office salaries 800,000Factory superintendence 480,000Doubtful accounts 100,000Factory maintenance 150,000Factory heat, light and power 220,000Income tax expense 170,000 Doubtful accounts are common costs allocated to administrative expenses and selling expense equally. Inventory balancesat the end of the fiscal period as compared with balances at the beginning of the fiscal period were as follows: Finished goods 200,000 IncreaseGoods in process 90,000 IncreaseRaw materials 100,000 Decrease Tax rate is 30%. Questions 3. What is the amount of selling and distribution expense for the current period?4. How much is the net income for…arrow_forward
- The following is the Trial Balance of Sonia HR Enterprises, a dealer in HR Software, as at 31st December, 2021. GHS GHS Capital 240,000 Receivables and Payables 159,000 51,000 Inventory 99,000 Motor vehicles: (cost) 72,500 Accumulated depreciation (31 December 2020) 32,500 Office equipment: (cost) 90,000 Accumulated depreciation (31 December 2020) 30,000 Administrative expenses 26,000 Purchases and sales 243,750 490,500 Employee benefits 33,000 Selling expenses 20,000 Plant: (cost) 125,000 Accumulated depreciation (31 December 2020) 37,500 Discounts 7,500 12,500 Accruals 79,000 Investment income 27,500 Returns 12,000 17,500 Cash and…arrow_forwardLoving Care Company provided the following balances on December 21, 2021: Franchise 200,000 Goods in process 600,00 Building 4,000,000 Employees income tax payable 20,000 Prepaid insurance 20,000 Raw materials 200,000 Notes payable 100,000 Cash 420,000 Accounts receivable 500,000 Retained earnings 880,000 Finished goods 400,000 Accrued Expenses 30,000 Trading securities 250,000 Claim receivable 20,000 Machinery 2,000,000 Advance from customer 100,000 Tools 40,000 Goodwill 100,000 Accumulated Depreciation-Machinery 1,300,000 Allowance for doubtful account 50,000 Plant expansion fund 500,000 Serial bonds payable (500,000 due every July 31 of each year 2,500,000 Accounts payable 300,000 Share capital 5,000,000 Accumulated Depreciation-Building 1,600,000 Income tax payable 60,000 Factory supplies 50,000 Share premium 500,000…arrow_forwardYou just completed your first year in business on 31 December 2021. Operating revenues were $360,000. Your company paid you an annual salary of $96,000. Two employees had annual salaries of $48,000 and $36,000. Your employment taxes and benefits during the year for you and employees were $34,600. Office supplies and postage were $10,400. Travel and entertainment expense to promote your new business was $17,000. Monthly tax-deductible expense for leasing office space was $2,700. The year’s depreciation expense on office furniture and fixtures was $15,600. You borrowed $120,000 and spent $15,000 in interest payments. The average tax rate for the business was 30%. (a) Prepare a multi-step income statement from the above information. (b) Analyze the financial performance of the new company’s first year in businessarrow_forward
- On September 9, Mavtech paid $30,000 in advance to suppliers to buy 30 computers. On September 10, Mavtech paid $450 and bought office supplies The computers that were paid for on September 9th were delivered to Mavtech on September 15. On September 17, a customer placed an order on Mavtech for 25 computers for a total price of $31,000. (This does not meet revenue recognition criteria.) On September 21, Mavtech hired an employee. The employee’s wage was fixed at $2,400 per month. The employee will be paid every month on the 21st. The first payment will be made on October 21. On September 22, Mavtech purchased an additional 40 computers for $40,000 on credit, due for payment on October. Prepare Journal Entryarrow_forwardSolomon 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.arrow_forwardFollowing are some transactions and events of Business Solutions. Feb. 26 The company paid cash to Lyn Addie for eight days' work at $130 per day. Mar. 25 The company sold merchandise with a $2,200 cost for $2,900 on credit to Wildcat Services, invoice dated March 25. Required:1. Assume that Lyn Addie is an unmarried employee. Her $1,040 of wages have deductions for FICA Social Security taxes, FICA Medicare taxes, and federal income taxes. Her federal income taxes for this pay period total $104. Compute her net pay for the eight days' work paid on February 26. (Round your answer to 2 decimal places. Do not round intermediate calculations.)2. Record the journal entry to reflect the payroll payment to Lyn Addie as computed in part 1. (Round your answers to 2 decimal places. Do not round intermediate calculations.)3. Record the journal entry to reflect the (employer) payroll tax expenses for the February 26 payroll payment. Assume Lyn Addie has not met earnings limits…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
What is liquidity?; Author: The Finance Storyteller;https://www.youtube.com/watch?v=XtjS7CfUSsA;License: Standard Youtube License