Need answer Max's Small Engine Repair Shop, a proprietorship, started theyear with total assets of $59,000 and total liabilities of $39,300.During the year, the business recorded $100,800 in repairrevenues, $54,300 in expenses, and Max Freeland, the owner,withdrew $10,300. Max's capital balance at the end of the yearwas:a) $64,600.b) $36,200.c) $45,600.d) $55,900.

Step 1: Definition of Owner's EquityOwner's equity represents the residual interest in a…

Answered: Max's Small Engine Repair Shop, a…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 5PB: Johnson, Incorporated, had the following transactions during the year: Purchased a building for...

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Ross Company is a C corporation providing property management services. Ross has used the cash method since inception because its gross receipts did not exceed $26,000,000. This year its average annual gross receipts for the prior three years crossed the $26,000,000 mark, requiring Ross to change from the cash method to the accrual method. At the end of its prior year, Ross had accounts receivable of $850,000 and accounts payable of $540,000. Compute and explain the adjustment to taxable income that Ross must make due to the change in accounting method. When must Ross include this adjustment in its income?
Wildhorse Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,004,000 on March 1, $1,284,000 on June 1, and $3,055,000 on December 31. Wildhorse Company borrowed $1,163,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,377,000 note payable and an 11%, 4-year, $3,691,000 note payable. Compute avoidable interest for Wildhorse Company. Use the weighted-average interest rate for interest capitalization purposes. (Round weighted-average interest rate to 4 decimal places, e.g. 0.2152 and final answer to 0 decimal places, e.g. 5,275.) Avoidable interest
The following transactions occurred for A New Company Inc. at the end of the year: a. Purchased a new building by paying $55,000 cash and signing a note payable for $220,000. b. Sold furniture that had an original cost of $13,000 for a gain of $800. The beginning accumulated depreciation was $36,000 and the ending accumulated depreciation was $30,000. Depreciation expense for the year was $3,000. c. Purchased new furniture for $11,000 cash. No depreciation has occurred on this furniture. d. Sold old computer equipment for $1,500 cash. e. Dividends of $19,000 were paid in cash Work through your calculations for each transaction and prepare the investing section of the statement of cash flows. Cash Flows from Investing Activities: Net Cash Used by Investing Activities ✓
In its first year of operations, Martha Enterprises Corp. reported the following information: a. Income before income taxes was $640,000. b. The company acquired capital assets costing $2,400,000; depreciation was $160,000, and CCA was $120,000. c. The company recorded an expense of $155,000 for the one-year warranty on the company's products; cash disbursements amounted to $79,000. d. The company incurred development costs of $77,000 that met the criteria for capitalization for accounting purposes. Development work was still ongoing at year-end. These costs could be immediately deducted for tax purposes. e. The company made a political contribution of $30,000 and expensed this for accounting purposes. f. The income tax rate was 28% and the year 2 tax rate was enacted, at 30%. In the second year, the company reported the following: a. Earnings before income tax were $1,700,000. b. Depreciation was $160,000; CCA was $360,000. c. The estimated warranty costs were $250,000, while the cash…
Sweet Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $4,860,000 on March 1, $3,240,000 on June 1, and $8,100,000 on December 31. Sweet Company borrowed $2,700,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $5,400,000 note payable and an 11%, 4-year, $9,450,000 note payable. Compute avoidable interest for Sweet Company. Use the weighted-average interest rate for interest capitalization purposes. (Round "Welghted-average interest rate" to 4 decimal places, e.g. 0.2152 and final answer to O decimal places, e.g. 5,275.) Avoidable interest 2$
Stuart Manufacturing Company was started on January 1, year 1, when it acquired $89,000 cash by issuing common stock. Stuart immediately purchased office furniture and manufacturing equipment costing $32,000 and $40,000, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of six years. The company paid $12,000 for salaries of administrative personnel and $21,000 for wages to production personnel. Finally, the company paid $26,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Stuart completed production on 10,000 units of product and sold 8,000 units at a price of $9 each in year 1. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)Required. Determine the amount of total assets that would appear on the December 31, year 1, balance sheet.
Stuart Manufacturing Company was started on January 1, year 1, when it acquired $89,000 cash by issuing common stock. Stuart immediately purchased office furniture and manufacturing equipment costing $32,000 and $40,000, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of six years. The company paid $12,000 for salaries of administrative personnel and $21,000 for wages to production personnel. Finally, the company paid $26,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Stuart completed production on 10,000 units of product and sold 8,000 units at a price of $9 each in year 1. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.) Required a. Determine the total product cost and the average cost per unit of the inventory produced in year 1.…
Johnson, Incorporated, had the following transactions during the year: Purchased a building for $5,000,000 using a mortgage for financing Paid $2,000 for ordinary repair on a piece of equipment Sold product on account to customers for $1,500,600 Paid $20,000 cash to add a storage shed in the corner of an existing building Paid $360,000 in monthly salaries Paid $25,000 for routine maintenance on equipment Paid $110,000 for extraordinary repairs Depreciation expense recorded for the year is $15,000. If all transactions were recorded properly, what is the amount of increase to the Property, Plant, and Equipment section of Johnsons balance sheet resulting from this years transactions? What amount did Johnson report on the income statement for expenses for the year?
Johnson, Incorporated had the following transactions during the year: Purchased a building for $5,000,000 using a mortgage for financing Paid $2,000 for ordinary repair on a piece of equipment Sold product on account to customers for $1,500,600 Purchased a copyright for $5,000 cash Paid $20,000 cash to add a storage shed in the corner of an existing building Paid $360,000 in monthly salaries Paid $25,000 for routine maintenance on equipment Paid $110,000 for major repairs If all transactions were recorded properly, what amount did Johnson capitalize for the year, and what amount did Johnson expense for the year?
Jada Company had the following transactions during the year: Purchased a machine for $500,000 using a long-term note to finance it Paid $500 for ordinary repair Purchased a patent for $45,000 cash Paid $200,000 cash for addition to an existing building Paid $60,000 for monthly salaries Paid $250 for routine maintenance on equipment Paid $10,000 for extraordinary repairs If all transactions were recorded properly, what amount did Jada capitalize for the year, and what amount did Jada expense for the year?
Thornton Manufacturing Company was started on January 1, year 1, when it acquired $89,000 cash by issuing common stock. Thornton immediately purchased office furniture and manufacturing equipment costing $9,100 and $32,600, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,800 salvage value and an expected useful life of four years. The company paid $11,200 for salaries of administrative personnel and $15,900 for wages to production personnel. Finally, the company paid $10,500 for raw materials that were used to make inventory. All inventory was started and completed during the year. Thornton completed production on 4,200 units of product and sold 3,290 units at a price of $15 each in year 1. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)
Ayayai Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $3,600,000 on March 1, $2,400,000 on June 1, and $6,000,000 on December 31.Ayayai Company borrowed $2,000,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $4,000,000 note payable and an 11%, 4-year, $7,000,000 note payable. Compute avoidable interest for Ayayai Company. Use the weighted-average interest rate for interest capitalization purposes. (Round "Weighted-average interest rate" to 4 decimal places, e.g. 0.2152 and final answer to 0 decimal places, e.g. 5,275.)

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