Provide answer Total Spa Services earned $150,000 of service revenue during 2021. Of the$150,000 earned, the business received $135,000 in cash. The remainingamount, $15,000, was still owed by customers as of December 31. In addition,Total Spa Services incurred $78,000 of expenses during the year. As ofDecember 31, $6,000 of the expenses still needed to be paid. In addition, TotalSpa Services prepaid $9,000 cash in December 2021 for expenses incurredduring the next year.A) Determine the amount of service revenue and expenses for 2021 usinga cash-basis accounting system.B) Determine the amount of service revenue and expenses for 2021 usingan accrual-basis accounting system.

Step 1: Introduction to the Revenue and ExpensesRevenue refers to the amount received or earned from…

Answered: Total Spa Services earned $150,000 of…

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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During 2020, Reliable Corporation had cash and credit sales of $21,760 and $15,225, respectively. The company also collected accounts receivable of $9,765 and incurred operating expenses of $27,700, 80% of which were paid during the year. In addition, Reliable prepaid $4,500 for an 18 month advertising campaign that began September 30. Reliable’s accrual basis net income (loss) for the year ending December 31, 2020 was: Group of answer choices A. $8,535 B. $14,075 C. ( $775) D. $9,285
During its first year of operations, Cooper Company bills credit customers $19,800 for services rendered. During the year, Cooper receives $16,500 from all customers, $3,700 of which is received from cash customers. Required: What amount of revenue should be shown on the income statement for the year?
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.)…
Johnny's lawn service erned $200,000 of service revenues for 2020. General accounting
Acme Inc. recognized the following transactions during their first year of business
During 2021, its first year of operations, Pave Construction provides services on account of $160,000. By the end of 2021, cash collections on these accounts total $110,000. Pave estimates that 25% of the uncollected accounts will be uncollectible. In 2022, the company writes off uncollectible accounts of $10,000.Required:1. Record the adjustment for uncollectible accounts on December 31, 2021.2. Record the write-off of accounts receivable in 2022 and calculate the balance of Allowance for Uncollectible Accounts at the end of 2022 (before adjustment in 2022).3. Assume the same facts as above but assume actual write-offs in 2022 were $15,000. Record the write-off of accounts receivable in 2022 and calculate the balance of Allowance for Uncollectible Accounts at the end of 2022 (before adjustment in 2022).
Sentry Transport Inc. of Atlanta provides in-town parcel delivery services in addition to a fullrange of passenger services. Sentry engaged in the following activities during the current year:a. Sentry received $5,000 cash in advance from Rich’s Department Store for an estimated 250deliveries during December 2019 and January and February of 2020. The entire amountwas recorded as unearned revenue when received. During December 2019, 110 deliverieswere made for Rich’s.b. Sentry operates several small buses that take commuters from suburban communities to thecentral downtown area of Atlanta. The commuters purchase, in advance, tickets for 50 onewayrides. Each 50-ride ticket costs $500. At the time of purchase, Sentry credits the cashreceived to unearned revenue. At year end, Sentry determines that 10,160 one-way rideshave been taken.c. Sentry operates several buses that provide transportation for the clients of a social service agencyin Atlanta. Sentry bills the agency quarterly at the…
The following transactions apply to Walnut Enterprises for 2018, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, 2018. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until 2019. Recognized the accrued interest at December 31, 2018. The following transactions apply to Walnut Enterprises for 2019: Paid the balance of the sales tax due for 2018. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, 2019. Paid $102,500 of other operating expenses…
Arrow Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Arrow's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $400,000. During 2021, Arrow sold merchandise on account for $12,000,000. Also during the year, customers returned $520,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. The amount to adjust the refund liability to its appropriate balance at year-end would be:A. 180,000B. 220,000C. 200,000D. 240,000
Described below are certain transactions of Pharoah Company for 2021: On May 10, the company purchased goods from Fox Company for $74,900, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on May 18. 1. On June 1, the company purchased equipment for $96,000 from Rao Company, paying $31,200 in cash and giving a one- year, 9% note for the balance. 2. On September 30, the company discounted at 11% its $220,000, one-year zero-interest-bearing note at Virginia State Bank, receiving $198,000. 3.
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $300,000. During 2021, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.Required:1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end.2. What is the amount of…
Thomas Company had the following information related to September 2020: 1) Depreciation on the store equipment was $60,000 for the month. 2) Sales of merchandise inventory for the month of September were $1,800,000, of which $1,200,000 was paid in cash and the remaining amount sold on credit. The cost of the merchandise sold was $1,080,000. 3) The next payroll will be $144,000 and will be paid on October 12. This payroll will cover wages earned during the last week of September and the first week of October. 4) The utility bill of $72,000 for the month of September was both received and paid in early October. 5) Thomas sold a company car for a gain of $12,000 on September 22. 6) On September 3, Thomas paid $6,000 for August’s telephone bill. 7) On October 1, Thomas received the September telephone bill, which totaled $12,000. The bill will be paid in mid-October. 8) Wages paid in cash to employees during the month totaled $288,000. This amount included $60,000 paid for work done in…

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