Abbey Park was organized on April 1, 2016, by Trudy Crawford. Trudy is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Trudy prepared the following income statement for the quarter that ended March 31, 2017.
Abbay Park
Income statement
For the quarter ended March 31,2017
Revenues 83000
Rent Revenue
Operating expenses
Advertising expense 4200
Salaries and wages expense 27600
Utilities expense 1500
Depreciation expense 800
Maintenance expense 2800
Total operating expense 36900
Net income 46100
Trudy knew that something was wrong with the statement because net income had never exceeded $20,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to review the income statement and other data. You first look at the trial balance. In addition to the account balances reported in the income statement, the ledger contains these selected balances at March 31, 2017.
Supplies 4500
Prepaid insurance 7200
Notes payable 20000
You then make inquiries and discover the following.
1. Rent revenue includes advanced rentals for summer-month occupancy, $21,000.
2. There were $600 of supplies on hand at March 31.
3. Prepaid insurance resulted from the payment of a 1-year policy on January 1, 2017.
4. The mail on April 1, 2017, brought the following bills: advertising for week of March 24, $110; repairs made March 10, $1,040; and utilities $240.
5. Wage expense totals $290 per day. At March 31, 3 days’ wages have been incurred but not paid.
6. The note payable is a 3-month, 7% note dated January 1, 2017. Instructions With the class divided into groups, answer the following.
(a) Prepare a correct income statement for the quarter ended March 31, 2017.
(b) Explain to Trudy the generally accepted accounting principles that she did not follow in preparing her income statement and their effect on her results.

Answer:

Abbey Park

a) Correct Income Statement for the quarter ended March 31, 2017:

Abbey Park

Income statement

For the quarter ended March 31,2017

Revenue

Rent Revenue                                      $62,000

Operating expenses    

Advertising expense                  4,310

Salaries and wages expense 28,470

Utilities expense                        1,740

Depreciation expense                 800

Maintenance expense             3,840

Supplies Expense                    3,900

Insurance expense                  1,800

Interest expense                       350

Total operating expense                     45,210

Net income                                        $16,790

b) The generally accepted accounting principles that Trudy did not follow in the preparation of her income statement are the accrual concept and the matching principle.  Failure to follow these principles means that the net income will be misstated.  The accounts were based on the cash basis instead of the accrual basis of generally accepted accounting principles.  This means that records for non-cash transactions were not recognized while some others were recognized based on their cash effects.

Explanation:

a) Income Statement for the quarter ended March 31, 2017:

Abbey Park

Income statement

For the quarter ended March 31,2017

Revenue

Rent Revenue                                      $83,000

Operating expenses    

Advertising expense                 4,200

Salaries and wages expense 27,600

Utilities expense                        1,500

Depreciation expense                 800

Maintenance expense             2,800

Total operating expense                     36,900

Net income                                         $46,100

Adjustments:

1. Rent Revenue = $62,000 ($83,000 - 21,000)

2. Supplies Expenses $3,900 ($4,500 - 600)

Supplies balance = 600

3. Prepaid Insurance = $5,400 ($7,200 - 1,800)

Insurance expense = $1,800 ($7,200/4)

4. Advertising Expense = $4,310 ($4,200 + 110)

   Maintenance Expense = $3,840 ($2,800 + 1,040)

   Utilities Expense = $1,740 ($1,500 + 240)

Expenses Payable = $1,390

5. Wages Expenses = $28,470 (27,600 + ($290 * 3))

Wages payable $870

6. Interest Expense = $350 ($20,000 * 7% * 3/12)

Determine the gross income of the beneficiaries in the following cases:
1. Justin’s employer was downsizing and offered employees an amount equal to one year’s salary if the employee would voluntarily retire.
2. Trina contracted a disease and was unable to work for six months. Because of her dire circumstances, her employer paid her one-half of her regular salary while she was away from work.
3. Coral Corporation collected $1,000,000 on a key person life insurance policy when its chief executive died. The corporation had paid the premiums on the policy of $77,000, which were not deductible by the corporation.
4. Juan collected $40,000 on a life insurance policy when his wife, Leona, died in 2020. The insurance policy was provided by Leona’s employer, and the premiums were excluded from Leona’s gross income as group term life insurance. In 2020, Juan also collected the $3,500 accrued salary owed to Leona at the time of her death.

X Company's degree of operating leverage (DOL) at the current sales volume level is calculated to be:

Question 1: TimeValueOfMoneyPro110Alt1 An engineer in a developing country observes that his project bank account has grown from 1400000 to 1558869 (local currency units) in 15 days with no deposits or withdrawals being made. He knows that the account earns interest compounded daily. Question 1 What is the daily compound rate of interest earned on the account

Celine Dion Company issued of 10% 20 -year bonds on January 1, 2014, at Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight-line method of amortization for bond premium or discount.
Instructions:
Prepare the journal entries to record: The issuance of the bonds.

A company produces a single product. Variable production costs are $13.40 per unit and variable selling and administrative expenses are $4.40 per unit. Fixed manufacturing overhead totals $50,000 and fixed selling and administration expenses total $54,000. Assuming a beginning inventory of zero, production of 5,400 units and sales of 4,300 units, the dollar value of the ending inventory under variable costing would be:_____.
a. $14,740.
b. $24,640.
c. $19,580.
d. $9,900.

In the market for financial capital,
a. those who supply financial capital pay interest on loans.
b. those who demand financial capital receive interest on loans.
c. the demand for financial capital comes from savings, and the supply goes to making loans.
d. the supply of financial capital comes from savings, and the demand goes to making loans.

On January 1, 2017, Crown Company sold property to Leary Company. There was no established exchange price for the property, and Leary gave Crown a $400,000 zero-interest-bearing note payable, promising 5 equal annual installments of $80,000, with the first payment due December 31, 2017. The prevailing rate of interest for a note of this type is 8%.

Required:
What is the carrying value of the notes payable at 12/31/14, after the first payment is made (assuming that the effective-interest method is used)?

A company maintains its records using accrual basis accounting; however, their accountant wants to create a statement of cash flows and needs to determine the cash flow from operating activities. For simplicity, we assume only one expense account (salaries). The following is data gathered from their records.

Services provided to customers during the period $600,00
Salaries expense for the period 350,000
Accounts receivable beginning balance 45,000
Accounts receivable (ending balance) 20,000
Salaries payable( beginning balance) 14,000
Salaries a able (ending balance) 8,000

Required:
a. Determine the amount of cash collected from customers during the period.
b. Determine the amount for cash paid for salaries during the period.
c. Determine accrual basis net income for the period.
d. Determine cash basis net income for the period.

The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $20, $12, $8, $4, and $2 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $8, $12, $20, $32, and $44 (one buyer at each price).
For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied.
Price Quantity Demanded Quantity Supplied
($ per widget) (widgets) (widgets)
$2
$4
$8
$12
$20
$32
$44
In this market, the equilibrium price will beper widget, and the equilibrium quantity will be (0 or 5 or 2 or 1 or 3 or 4) widgets.

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Beginning Inventory Ending Inventory Finished goods (units) 20,000 30,000 Raw material (grams) 50,000 40,000 Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000 units during the year. How much of the raw material should the company purchase during the year

Don James purchased a new automobile for $20,000. Don made a cash down payment of $5,000 and agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of purchase. Financing is available at a 24% annual interest rate. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Calculate the amount of the required monthly payment. (Round your final answer to nearest whole dollar amount.)

In the week to come, a bank expects $55 million in incoming deposits, $75 million in acceptable loan requests, $35 million in money market borrowings, $10 million in deposit withdrawals, and $30 million in loan repayments. The bank is expecting a: A. liquidity deficit. B. liquidity surplus. C. balanced liquidity position. D. liquidity reversal. E. None of the above.

On January 15, Pinkney, Inc., issued 10,000 shares of $10 par value common stock in exchange for land and a building. Five years ago, the stockholder purchased the land for $40,000 and constructed the building at a cost of $90,000. At the time of the stock issuance, the land and the building had fair market values of $45,000 and $95,000, respectively. Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

The Business Cycle Dating Committee and the National Activity Index are two methods used to monitor the phases of the business cycle and determine when a recession occurs. Decide which method each of the six items describes and place it in the correct category. If the item does not describe either, then place it in the neither category.
Business Cycle Dating Committee National Activity Index neither

On the last day of December 2021, Coaster Trucks entered into a transaction that resulted in a receipt of $300,000 cash in advance related to services that will be provided during January 2022. During December of 2021, the company also performed $165,000 of services which were neither billed nor paid. Prior to December adjustments and before these two transactions were recorded, the company’s trial balance showed service revenue of $1,425,790 at December 31, 2021. There are no other prepaid services yet to be delivered, and during the month all outstanding accounts receivable from prior months were collected. If Coaster Trucks makes the appropriate adjusting entry, how much service revenue will be reflected on the December 31, 2021 income statement?

Which of these best describes the relationship
between business equity and profit?
A. The proportion of the
equity one owns is more than the
proportion of the profits received.
B. The proportion of the equity one owns is less than the
proportion of the profits received.
C. The proportion of the equity one owns is the same proportion
of the profits received.

Classify the following investments. Each case is independent of the other.
Investment Classifications
(a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold. select an Investment Classification
(b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock. select an Investment Classification
(c) Bonds were purchased in December of this year. The bonds are expected to be sold in January of next year. select an Investment Classification
(d) Bonds that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold. select an Investment Classification
(e) Preferred stock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time. select an Investment Classification
(f) A bond that matures in 10 years was purchased. The company has committed the money for an expansion project planned 10 years from now.

Cost flow relationships The following information is available for the first year of operations of Creston Inc., a manufacturer of fabricating equipment:
Sales $ 12,755,000
Gross profit 5,359,700
Indirect labor 422,600
Indirect materials 185,500
Other factory overhead 834,900
Materials purchased 4,251,600
Total manufacturing costs for the period 8,122,000
Materials inventory, end of period 298,900
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Determine the following amounts. Round your answers to the nearest dollar. Cost of goods sold $fill in the blank 2 Direct materials cost $fill in the blank 3 Direct labor cost $fill in the ______

Learning Objective 15-C2: Explain job cost sheets and how they are used in job order costing. Skip to question In a job order costing system, the costs of producing each job are accumulated on a separate job cost sheet. Costs of direct materials, direct labor, and overhead applied are accumulated separately on the job cost sheet and then added to determine the total cost of a job. Job cost sheets for jobs in process, finished jobs, and jobs sold make up subsidiary records controlled by general ledger accounts.

What is the difference between a capital gains tax and a sales tax?​

The banking crisis of 2008 is quite interesting to analyze. The factors that led to this near banking collapse are intriguing to say the least. In this exercise you will be evaluating the factors that led up to the crisis and determining which ones could have created this scenario. There is no simple answer to what led to the banking crisis, as there were many factors that contributed over a long period of time. Understanding the factors that led to the crisis is very important, as such an understanding will help regulators prevent similar situations in the future.

Fore each item listed, select how much it contributed to the banking crisis.

1. The repeal of some provisions of the Glass-Steagall Act of 1933
a. Major contributor
b. Not a major contributor

2. Savvy individual investors
a. Major contributor
b. Not a major contributo

3. The Community Reinvestment Act (CRA)
a. Major contributor
b. Not a major contributor

4. Borrowersâ lack of financial knowledge
a. Major contributor
b. Not a major contributor

You have been working on some financial projections manually for two days now. It seems that each time you think you have them completed your boss shows up with a new assumption or another "what if" question. If you only had a copy of a spreadsheet software program for your personal computer, you could plug in the new assumptions and revise the estimates with ease. Then, a colleague offers to let you make a copy of some software that is copyrighted. What would you do?

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Account Titles Debit Credit
Cash $2
Accounts Receivable 6
Supplies 13
Land 0
Equipment 54
Accumulated Depreciation $5
Software 21
Accumulated Amortization 6
Accounts Payable 4
Notes Payable (short-term) 0
Salaries and Wages Payable 0
Interest Payable 0
Income Tax Payable 0
Common Stock 72
Retained Earnings 9
Service Revenue 0
Salaries and Wages Expense 0
Depreication Expense 0
Amortization Expense 0
Income Tax Expense 0
Interest Expense 0
Supplies Expense 0
Totals 85 85

Required

a. In the journal, record the entry to close revenue and expense accounts to retained earnings.
b. Post the closing statement.

Tom and Linda are married taxpayers who file a joint return. They have itemized deductions of $13,050 and four exemptions. Assuming an adjusted gross income of $40,000, what is their taxable income for 2017

In Los Angeles County, the median price rose 0.5% to $618,000 in June and sales fell 12.1%.
In Orange County, the median price slipped 0.3% to $738,000 and sales fell 9.4%.
In Riverside County, the median price climbed 5.3% to $399,000 and sales fell 4%.
In San Bernardino County, the median price rose 1.5% to $340,000 and sales fell 11.4%.
In Ventura County, the median price dropped 5.7% to $580,000 and sales rose 1.6%.
In San Diego County, the median price rose 2.6% to $590,000 and sales fell 7.4%.
1. The price elasticity of demand in San Bernardino County is ____. Give your answer in two decimals.
2. Holding the price elasticity of demand constant, sales in San Bernardino County would fall by __% if prices increased by 2%. Give your answer to two decimals.
3. Assume that no other factors influence the demand or supply of housing. In ___ County, the law of demand appears to be violated. Choices: San Diego, Riverside, Orange and Los Angeles

Standard, Inc. reported EBIT of $35 million for last year. Depreciation expense totaled $20 million and capital expenditures came to $7 million. Free cash flow is expected to grow at a rate of 6 percent for the foreseeable future. Stuart faces a 21 percent tax rate and has a .40 debt to equity ratio with $120 million (market value) in debt outstanding. Standard's equity beta is 1.25, the risk-free rate is currently 5 percent and the market risk premium is estimated to be 7.5 percent. What is the current value (in millions) of Standard's equity?

Implied interest rate and period Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Joshua inherited an annuity worth $6,830.77 from his uncle. The annuity will pay him eight equal payments of $1,100 at the end of each year. The annuity fund is offering a return of ______.

John, Lesa, and Trevor form a limited liability company. John contributes 60 percent of the capital, and Lesa and Trevor each contribute 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent of the profits in accordance with his contribution. Lesa and Trevor, however, assume that the profits will be divided equally. A dispute over the profits arises, and ultimately a court has to decide the issue. What law will the court apply

On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept:

Weatherford Company Absorption Costing Income Statement For the Month Ended November 30

Sales (3,300 units) $125,400
Cost of goods sold:
Cost of goods manufactured (3,900 units) $105,300
Inventory, November 30 (500 units) (13,500)
Total cost of goods sold 102,500
Gross profit $44,500
Selling and administrative expenses 25,730
Income from operations $18,770

Assume the fixed manufacturing costs were $28,800 and the fixed selling and administrative expenses were $12,600.

Required:
Prepare an income statement according to the variable costing concept.

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