In its first year of operations, Sheridan Company recognized $30,000 in service revenue, $7,200 of which was on account and stilloutstanding at year-end. The remaining $22,800 was received in cash from customers.The company incurred operating expenses of $16,600. Of these expenses, $13,520 were paid in cash; $3,080 was still owed onaccount at year-end. In addition, Sheridan prepaid $2.650 for insurance coverage that would not be used until the second year ofoperations.(a)Calculate the first year's net earnings under the cash basis of accounting, and the first year's net earnings under the accrual basisof accountingNet IncomeCash Basis$Accrual Basis

The net income is calculated as the difference between the revenue and expenses. Under cash basis…

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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PHE, Inc.estimates warranty expense at 2% of sales. Sales during the year were $4 million and warranty related cash expenditures were $34,000. What was the balance in the Warranty Liability account at the end of the year? Select one: O a. $56,000 O b. $34,000 c. $80,000 O d. $36,000 O e. $46,000
Accounts receivable in the amount of $658,000 were assigned to the Fast Finance Company by Sunland, Inc., as security for a loan of $564,000. The finance company assessed a 4% finance charge on the face amount of the loan, and the note bears interest at 8% per year.During the first month, Sunland collected $366,600 on assigned accounts. This amount was remitted to the finance company along with one month's interest on the note.Make all the entries for Sunland Inc. associated with the transfer of the accounts receivable, the loan, and the remittance to the finance company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit (To record the transfer of the accounts receivable.) (To record the loan amount…
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
mashed Pumpkins Company paid $112 in dividends and $547 in interest over the past year. The company increased retained earnings by $456 and had accounts payable of $558. Sales for the year were $16, 160 and depreciation was $708. The tax rate was 25 percent. What was the company's EBIT?
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Alpaca Corporation had revenues of $220,000 in its first year of operations. The company has not collected on $19,800 of its sales and still owes $27,000 on $90,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $10,500 in salaries. Owners invested $16,000 in the business and $16,000 was borrowed on a five-year note. The company paid $2,200 in interest that was the amount owed for the year, and paid $7,200 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 30%. Compute net income for the first year for Alpaca Corporation.
During Year 1, its first year of operations, Benitez Co. reported sales of $360,000. At the end of Year 1, the company estimated its warranty obligation at 2% of sales. During Year 1, the company paid $4,800 cash to settle warranty claims. Which of the following statements is true? Multiple Choice Warranty expenses would decrease net earnings by $7,200 in Year 1. All of these answer choices are correct. The warranties payable account has a balance of $2,400 at the end of Year 1. Cash decreased by $4,800 as a result of the accounting events associated with warranties in Year 1.
During the first year of operations, Ken's Data Ventures, a Dedham-based construction company, had sales of $4,350,0003; it wrote $35,700 of accounts as uncollectible using direct write-off method, and reported net income of $521,000. Required: If the company were to use the allowance method with uncollectible estimate of 19% of sales, determine what the net income would have been under the allowance method. Show Your Work:

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