Concept explainers
Videos
a.
The
a.
Answer to Problem 26P
The calculation of income statement of Company W is as follows:
Table (1)
Hence, the net income of Company W is $23,000.
The calculation of balance sheet of Company W is as follows:
Table (2)
Explanation of Solution
Income statement:
Income statement is the financial statement of a company that shows all the revenues earned and expenses incurred by the company over a period of time.
Balance sheet:
Balance sheet is one of the financial statements that summarize the assets, the liabilities, and the shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.
Working notes:
The entire $65,000 is treated as operating expenses.
(1)
The total cash is calculated as follows:
Hence, the total cash is $93,000.
(2)
b.
The balance sheet and income statement of Company W according to GAAP.
b.
Answer to Problem 26P
The calculation of income statement of Company W is as follows:
Table (3)
Hence, the net income of Company W is $75,000.
The calculation of balance sheet of Company W is as follows:
Table (4)
Explanation of Solution
Income statement:
Income statement is the financial statement of a company that shows all the revenues earned and expenses incurred by the company over a period of time.
Balance sheet:
Balance sheet is one of the financial statements that summarize the assets, the liabilities, and the shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.
Working notes:
The
Hence, the depreciation is $13,000.
(3)
The depreciation amount $13,000 must be adjusted in the balance sheet as
(4)
c.
The balance sheet and income statement of Company W according to GAAP.
c.
Answer to Problem 26P
The calculation of income statement of Company W is as follows:
Table (5)
Hence, the net income of Company W is $54,500.
The calculation of balance sheet of Company W is as follows:
Table (6)
Explanation of Solution
Income statement:
Income statement is the financial statement of a company that shows all the revenues earned and expenses incurred by the company over a period of time.
Balance sheet:
Balance sheet is one of the financial statements that summarize the assets, the liabilities, and the shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.
Working notes:
The depreciation on the manufacturing equipment is calculated as follows:
Hence, the depreciation cost is $8,000.
The cost per unit is calculated as follows:
Hence, the cost per unit is $19.
Calculate the cost of goods sold:
Hence, the cost of goods sold is $28,500.
(5)
The total finished goods are calculated as follows:
Hence, the finished goods are $9,500.
(6)
The depreciation on the manufacturing equipment is calculated as follows:
Hence, the accumulated depreciation cost is $8,000.
(7)
d.
Explain the reason why management might be more interested in average cost than the actual cost.
d.
Explanation of Solution
The exact cost of the product cannot be determined because the labor and material usage will differ among the same products. Cost average is an element that smoothens these differences.
Want to see more full solutions like this?
Chapter 10 Solutions
Survey Of Accounting
- 14 - ABC Co. is a manufacturing company and its selected financial statements items are given as following. Net Sales equals to 32000 for the year 2020 and 28000 for the year 2019. COGS equals to 24000 and 21000 respectively for the year 2020 and 2019. Accounts Receivable for the year 2020 equals to 8500 and 7800 for the year 2019. Inventory equals to 7500 and 6800 respectively for the year 2020 and 2019. Accounts Payable for the year 2020 equals to 11000 and 9000 for the year 2019. (All numbers are in dollars). What is days sales inventory for the year 2020? a) O 89 b) O 109 c) O 99 d) O 119arrow_forwardView Policies Current Attempt in Progress On June 1, 2022, Pharoah Company was started with an initial investment in the company of $21,250 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2022, and the revenues and expenses for the month of June, its first month of operations: Cash Accounts receivable Service revenue Supplies Advertising expense Equipment Common stock $ 5,600 4,400 8,500 2,342 (a1) 400 26,800 21,250 Notes payable Accounts payable Supplies expense Maintenance and repairs expense Utilities expense Salaries and wages expense Prepare an income statement for the month of June. PHAROAH COMPANY Income Statement During June, the company issued no additional stock but paid dividends of $1,683. LA $14,000 पी 900 1,125 690 210 1,400 $arrow_forwardQUESTION FIVE: The following information relates to the operations of the East L. Trading Company for the three-year period ended 31 December 2019 Income statements 2019 2018 2017 $ $ $ Net sales 1,000,000 900,000 800,000 Cost of goods sold 600,000 550,000 545,000 Gross income 400,000 350,000 255,000 Selling and administration expenses 300,000 275,000 220,000 Net income before tax…arrow_forward
- QUESTION FIVE: The following information relates to the operations of the East L. Trading Company for the three-year period ended 31 December 2019 Income statements 2019 2018 2017 $ $ $ Net sales 1,000,000 900,000 800,000 Cost of goods sold 600,000 550,000 545,000 Gross income 400,000 350,000 255,000 Selling and administration expenses 300,000 275,000 220,000 Net income before tax…arrow_forwardQuestion 5 Zombie Berhad has the following trial balance at 31 December 2021: Revenue Purchases Returns inwards Plant at cost Machinery at cost Office equipment at cost Accumulated depreciation-- Plant Accounts payable Long-term borrowing Accounts receivable Inventory -- Machinery - Office equipment Cash and bank Administration expenses Long term borrowing interests Salaries and wages Marketing expenses Discount allowed Share capital Retained profits as at 1 Jan 2021 General Reserve Total RM 730,600 208,000 10,712,000 4,940,000 4,680,000 2,191,072 218,400 358,904 520,000 26,000 252,720 208,000 72,800 25,118,496 RM 7,602,504 936,000 988,000 520,000 629,200 1,040,000 • Ordinary share dividend proposed to be 6%. Long term borrowing interest where half year interest still owing. 8,320,000 4,602,208 480,584 25,118,496 ..5/- Additional information: • Inventory as at 31 December 2021 was RM447,200. • Provision for company tax was RM429,520. • Depreciation 20% on cost per annum based on…arrow_forwardQuestion 1: Following amounts have been Extracted from the records of Monday Limited. Description 2019 2018 - Rs. In 000- Sales 32,875 31,390 Gross profit 16,880 14,310 Profit for the year 3,300 2,700 Account receivable 3,860 2,510 Account payable 4,660 2,890 Inventory 430 445 Cash at bank 12 37 Bank overdraft 280 40 Monday Limited secured a large new contract to supply goods to a large departmental store across a two year period from 1st July 2019. Monday Limited normally offers wholesale customers 30 days’ credit, but department store would only agree to the contract with 90 days credit terms. The directors of Monday Limited agreed to this as they believed it was worth it to have their products placed with this department store. Monday Limited has an average 45 day credit from its suppliers. The bank overdraft is used to fund working capital and currently has a limit of Rs.300,000.…arrow_forward
- PROBLEM 14: MMM Company started operations in 2019. The following data are abstractedfrom the company’s production and sales records: 2019 2020 2021 Number of units produced 120,000 116,250 101,250 Number of units sold 75,000 108,750 97,500 Unit production cost P 4.50 P 5.20 P 5.80 Sales revenue 600,000 900,000 975,000 Using the FIFO cost flow assumption, the gross profit for the year ended December 31, 2021 is:arrow_forwardQuestion 3 ABC Company Ltd. has annual revenues of $750 million and annual cost of goods sold of $450 million. Annual cash flows from operations are $51 million, while daily credit sales were $163,548. It published its annual report for the financial year 2021- 22 ending, with the following balance sheet items as at 31 march 2022: Ending inventory: $82 million Ending accounts receivable: $56 million Ending accounts payable: $43 million ● ABC Co. Ltd. treasurers forecast the following balance pattern for monthly collections: ● ● ● Month 0: 5% Month 1: 40% Month 2: 35% Month 3: 15% Month 4: 5% Required: a) Calculate the Cash Conversion Cycle (CCC) for the company and discuss measures the company could adopt to shorten its CCC. b) What percentage of outstanding sales proceeds are yet to be collected as receivables 3 months after the sales were invoiced?arrow_forwardProblem 24-02 Windsor Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2021. A B C D E Sales revenue $40,200 $75,000 $582,000 $35,000 $55,000 Cost of goods sold 19,300 49,500 270,600 19,400 30,500 Operating expenses 9,800 40,800 231,000 12,300 17,600 Total expenses 29,100 90,300 501,600 31,700 48,100 Operating profit (loss) $11,100 $(15,300) $80,400 $3,300 $6,900 Identifiable assets $34,600 $81,500 $504,000 $66,000 $50,600 Sales of segments B and C included intersegment sales of $19,900 and $99,200, respectively. Determine which of the segments are reportable based on the: Reportable Segment (1) Revenue test. (2) Operating profit (loss) test. (3) Identifiable assets…arrow_forward
- 11arrow_forwardsarrow_forward14 Victory ML Bus company has the following data for the first quarter of 2021: Gross receipt from passengers P 8,000,000 Gross revenue from cargo operations 5,000,000 Expenses – Passengers operation 4,750,000 Expenses – Cargo operations 2,500,000 Gross receipt from rental of facilities 2,000,000 Additional info: 25% of its gross revenue from cargo operations were still outstanding as of the end of the quarter Required: determine the total business tax due for the first quarterarrow_forward
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning