In its first year of operations, Pharoah Company recognized $ 31,800 in service revenue, $ 6,400 of which was on account and stilloutstanding at year-end. The remaining $ 25,400 was received in cash from customers.The company incurred operating expenses of $ 16,600. Of these expenses, $ 12,730 were paid in cash; $ 3,870 was still owed onaccount at year-end. In addition, Pharoah prepaid $ 2,390 for insurance coverage that would not be used until the second year ofoperations.Calculate the fırst year's net earnings under the cash basis of accounting, and the first year's net earnings under the accrual basisof accounting.Cash BasisAccrual BasisNet Income$2$eTextbook and MediaWhich basis of accounting (cash or accrual) provides more useful information for decision-makers?

Cash basis is a major accounting method that recognizes revenues and expenses at the time cash is…

Answered: In its first year of operations,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Monty Corporation shipped $20,600 of merchandise on consignment to Gooch Company. Monty paid freight costs of $1,800. Gooch Company paid $550 for local advertising, which is reimbursable from Monty. By year-end, 63% of the merchandise had been sold for $21,500. Gooch notified Monty, retained a 10% commission, and remitted the cash due to Monty.Prepare Monty’s journal entry when the cash is received. (Round answers to 0 decimal places, e.g. 1,525. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Giga Inc has the following information: Unearned service revenue=$16,680 Sales tax payable=$8,490 Accounts payable=54,470 1.In the month of January dated 05, the company sold merchandise of cash amounting to $16,200, which includes 8% sales tax amount. 2.Jan-12-Services to customers who made advance payment of 11,490 3.Jan-14-Payment paid to state revenue department for sales tax collected in december 2014 (8,490) 4.Jan-20-Company sold 800 units of a new product on credit at 50 per unit, plus 8% sales tax 5.Jan-21-Borrowed 27,000 from Emerald Bank on 3-month, 8%, 27,000 note. 6.Jan-25-Company sold merchandise for cash totaling 10,098 which includes 8% sales tax. Required: January transactions-Journal entries
Carpenter Inc. estimates warranty expense at 3% of sales. Sales during the year were $8 million and warranty expenditures were $53,000. What was the balance in the Warranty Liability account at the end of the year? $202,000. $240,000 $187,000 $53,000
Flint Corporation shipped $20,400 of merchandise on consignment to Gooch Company. Flint paid freight costs of $2,000. Gooch Company paid $480 for local advertising, which is reimbursable from Flint. By year-end, 62% of the merchandise had been sold for $21,500. Gooch notified Flint, retained a 10% commission, and remitted the cash due to Flint. Prepare Flint's journal entry when the cash is received. (Round answers to 0 decimal places, e.g. 1,525. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation (To record the cash remitted to Flint.) (To record the cost of inventory sold on consignment.) Debit Ill Credit
Jayco Inc. started its operations in 2022. Its sales during 2022, all on account, totalled $700,000. The company collected $500,000 in cash from customers during the year and wrote off $8,000 in uncollectible accounts. The company set up an allowance for doubtful accounts at December 31, 2022, its fiscal year-end, and determined the account balance to be $14,000. The unadjusted balances of selected accounts at December 31, 2023 are as follows: Accounts receivable $ 300,000 Allowance for doubtful accounts (debit) 10,000 Sales revenue (including 80 percent in sales on account) 800,000 Aging of the accounts receivable on December 31, 2023, resulted in an estimate of $11,000 in potentially uncollectible accounts. Required: 2. Prepare the journal entries to record all the transactions during 2023 and post them to appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)…
Blossom Corporation shipped $21,900 of merchandise on consignment to Cullumber Company. Blossom paid freight costs of $2,100. Cullumber Company paid $550 for local advertising, which is reimbursable from Blossom. By year-end, 65% of the merchandise had been sold for $21,900. Cullumber notified Blossom, retained a 10% commission, and remitted the cash due to Blossom. Prepare Blossom's journal entry when the cash is received. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record the cash remitted to Blossom.) (To record the cost of inventory sold on consignment.) Debit 11 Credit 1
The following transactions apply to Ozark Sales for Year 1: The business was started when the company received $48,000 from the issue of common stock. Purchased merchandise inventory of $176,000 on account. Sold merchandise for $202,000 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $127,000. Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. Paid the sales tax to the state agency on $152,000 of the sales. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2. Paid $6,000 for warranty repairs during the year. Paid operating expenses of $55,500 for the year. Paid $124,300 of accounts payable. Recorded accrued interest on the note issued in transaction number 6. b1. Prepare the journal entries for the preceding transactions.b2. Post…
Some data regarding the financial enterprise are as follows;- The company collects its sales 25% in cash, 40%: 1 month term and the remainder with 2 months maturity.- Purchases are made in advance.- It is required to have 50000 balances in the cash register of the company at all times.- In cases where there is a deficit, credit will be used from the management bank and this deficit will be closed. Likewise, in cases of excess, the loans used from the relevant bank will be closed.- There is 35000 cash in the company account as of 30.04.2021. In addition, the company owes 75000 loans to the management bank as of the same date. When the cash budget of the enterprise for the period of May-August 2021 is prepared, what is the "cumulative loan" balance for August 2021?
Wilcox Mills is a manufacturer that makes all sales on 30-day credit terms. Annual sales are approximately $30 million. At the end of year 1, accounts receivable were presented in the company's balance sheet as follows. Accounts receivable from clients Less: Allowance for doubtful accounts $3,100,000 80,000 During year 2, $190,000 of specific accounts receivable were written off as uncollectible. Of these accounts written off, receivables totaling $14,000 were subsequently collected. At the end of year 2, an aging of accounts receivable indicated a need for a $256,000 allowance to cover possible failure to collect the accounts currently outstanding. Wilcox Mills makes adjusting entries for uncollectible accounts only at year-end. Required: a. Prepare the following general journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. One entry to summarize all accounts written off against the Allowance for Doubtful…
Statsen Company, which prepares financial reports at the end of the calendar year, established a branch on July 1, 2020. The following transactions occurred during the formation of the branch and its first six months of operations, ending December 31, 2020. 1. The Home Office sent $35,000 cash to the branch to begin operations. 2. The Home Office shipped inventory to the branch. Intercompany billings totaled $75,000, which was the Home Office's cost. 3. The branch acquired merchandise display equipment which cost $15,000 on July 1, 2020. (Assume that branch fixed assets are carried on the home office books). 4. The branch purchased inventory costing $53,750 from outside vendors on account. 5. The branch had credit sales of $106,250 and cash sales of $43,750. Requirements: 1. Prepare journal entries in the books of the home office and in the books of the branch office for the above transaction

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