Two years ago, Darlene Darby opened a delivery service. Darby reports the following accounts on her income statement: Sales $69,510 Advertising Expense Salaries Expense 3,430 37,440 Rent Expense 9,900 These amounts represent two years of revenue and expenses. Darby asks you how she can tell how much of the income is from the first year of business and how much is from the second year. She provides the following additional data: a. Sales in the second year are double those of the first year. b. Advertising expense is for a $510 opening promotion and weekly ads in the newspaper. c. Salaries represent one employee for the first nine months and two employees for the remainder of the time. Each is paid the same salary. No raises have been granted. d. Rent has not changed since the business opened. Required: Prepare income statements for Years 1 and 2. Darby Delivery Service Income Statements Year 1 Year 2 Sales revenue 69,510 Expenses: Advertising 3,430 Salaries 37,440 Rent 9,900 Total expenses 50,770 Net loss 18,740

Two years ago, Darlene Darby opened a delivery service. Darby reports the following accounts on her income statement: Sales $69,510 Advertising Expense Salaries Expense 3,430 37,440 Rent Expense 9,900 These amounts represent two years of revenue and expenses. Darby asks you how she can tell how much of the income is from the first year of business and how much is from the second year. She provides the following additional data: a. Sales in the second year are double those of the first year. b. Advertising expense is for a $510 opening promotion and weekly ads in the newspaper. c. Salaries represent one employee for the first nine months and two employees for the remainder of the time. Each is paid the same salary. No raises have been granted. d. Rent has not changed since the business opened. Required: Prepare income statements for Years 1 and 2. Darby Delivery Service Income Statements Year 1 Year 2 Sales revenue 69,510 Expenses: Advertising 3,430 Salaries 37,440 Rent 9,900 Total expenses 50,770 Net loss 18,740

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

How do you compute the earnings per share for the three years for Walmart?
Medwig Corporation has a DSO of 17 days. The company averages $8,500 in sales each day (all customers take credit). What is the company's average accounts receivable? Assume a 365-day year. Round your answer to the nearest dollar.
In its first year of operations, Sheridan Company recognized $30,000 in service revenue, $7,200 of which was on account and still outstanding 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 on account at year-end. In addition, Sheridan prepaid $2.650 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and the first year's net earnings under the accrual basis of accounting Net Income Cash Basis $ Accrual Basis
Pat's Custom Tuxedo Shop maintains its records on the cash basis. During this past year Pat's collected $42,900 in tailoring fees, and paid $12,100 in expenses. Depreciation expense totaled $1,500. Accounts receivable increased $1,050, supplies increased $3,700, and accrued liabilities increased $1,800. Pat's accrual-basis net income was: Multiple Choice $32,250. $26,350. $35,850. $22,750.
am. 295.
Explain in details please fast ASAP The Sports Store has a beginning receivables balance on January 1 of $2,640. Sales for January through April are $3,440, $3,590, $2,690, and $4,720, respectively. The accounts receivable period is 45 days. How much did the store collect in the month of April? Assume a year has 360 days.
In its first year of operations, Maria Corp.earned 48,100 in service revenue.Of that amount, 8,200 was on account and the remainder, 39, 900, was collected in cash from customers. The company incurred various expenses totalling 32,300, of which 28,800 was paid in cash. At the year end, 3,500 was still owing on account. In addition, Maria prepaid 2,000 for insurance coverage that covered the last half of the first year and the first half of the second year. maria expects to owe 3000 of income tax when it files its corporate income tax return after year end.
How much sales revenue and net income would you expect PolicePrep to have in the next fiscal year (i.e., 12 months from July, 2003 to June, 2004; see Exhibit 5 on pg. 15). Please explain how you arrived at your answer. Note that Exhibit 5 covers 1 year, with the first column reporting 6 months data from July-Dec 02’ and the next two columns reporting data on the quarterly basis for Jan-Mar 03’ and Apr-Jun 03’)? If you don’t know what EBITDA stands for, please see: http://en.wikipedia.org/wiki/Earnings_before_interest,_taxes,_depreciation_and_amortization
A colleague of yours has been reviewing the second-quarter income statements for a number of companies and is questioning a number of the expense items included in the statements. For each of the following independent questions, provide a written response to your colleague’s questions.1. A footnote accompanying Company A’s second-quarter income statement states that $360,000 was expended on research and development during the quarter on activities that should benefit operations over the next 24 months. Why does the second quarter reflect an expense of $120,000 rather than $15,000?2. Company B reported pretax income in both the first and second quarters, and the statutory tax rate during those periods and for the balance of the year is 30%. Assume that there were no net operating losses in prior years for tax purposes. However, both of the quarters reported an effective tax rate of less than 30%. What could possibly explain this?3. Assume the same facts as in part (2) except that the…
The Gilmore Insurance Group earned a profit of $10,000 in its first month of business. Then, its profit increased by 3% each month for the next two years. What is the total profit that the Gilmore Insurance Group earned in its first two years?