Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting. Requirement 1: To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

Question

Chalmers Corporation operates in multiple areas of the globe, and relatively large price changes are common. Presently, the company sells 110,200 units for $50 per unit. The variable production costs are $20, and fixed costs amount to $2,079,500. Production engineers have advised management that they expect unit labor costs to rise by 10 percent and unit materials costs to rise by 15 percent in the coming year. Of the $20 variable costs, 25 percent are from labor and 50 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 12 percent. It is also expected that fixed costs will rise by 10 percent as a result of increased taxes and other miscellaneous fixed charges. The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 8 percent during the year. Required: Compute the volume in units and the dollar sales level…

Answer 1

Question

Chapter 2, Problem 19CE

To determine

Concept Introduction:

Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting.

Requirement 1:

To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

To determine

Concept Introduction:

Conservatism principle- This principle states that the accountant should always be conservative in recording all uncertain or estimated revenue and always record and report all uncertain expense or loss.

Requirement 2:

To determine the principle when inventory, which was damaged by flood, is reported at the lower of its cost or market value.

To determine

Concept Introduction:

Historical cost- It states that the resources reported in financial statements should be recorded at initial acquisition cost that is the exchange price at the time the resource is acquired.

Requirement 3:

To determine the principle when land, located in a desirable location, is reported at original acquisition price, even though its value has increased by over 100% since it was purchased.

To determine

Concept Introduction:

Expense recognition principle- It states that all expenses in a business should be recognized and reported in the same time-period as the revenue the business generates. It can be the same time when the cash is paid, or it might predate or follow with the revenue amount realized. This is commonly referred as matching principle.

Requirement 4:

To determine the principle when the cost paid for a delivery truck is recorded as an asset and expensed over the next 5 years as it is used to help generate revenue.

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Chalmers Corporation operates in multiple areas of the globe, and relatively large price changes are common. Presently, the company sells 110,200 units for $50 per unit. The variable production costs are $20, and fixed costs amount to $2,079,500. Production engineers have advised management that they expect unit labor costs to rise by 10 percent and unit materials costs to rise by 15 percent in the coming year. Of the $20 variable costs, 25 percent are from labor and 50 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 12 percent. It is also expected that fixed costs will rise by 10 percent as a result of increased taxes and other miscellaneous fixed charges. The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 8 percent during the year. Required: Compute the volume in units and the dollar sales level…

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Compare and contrast the procedures for lodging an objection in Jamaica with those of Trinidad and Tobago.

Answer 2

Question

Chapter 2, Problem 19CE

To determine

Concept Introduction:

Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting.

Requirement 1:

To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

To determine

Concept Introduction:

Conservatism principle- This principle states that the accountant should always be conservative in recording all uncertain or estimated revenue and always record and report all uncertain expense or loss.

Requirement 2:

To determine the principle when inventory, which was damaged by flood, is reported at the lower of its cost or market value.

To determine

Concept Introduction:

Historical cost- It states that the resources reported in financial statements should be recorded at initial acquisition cost that is the exchange price at the time the resource is acquired.

Requirement 3:

To determine the principle when land, located in a desirable location, is reported at original acquisition price, even though its value has increased by over 100% since it was purchased.

To determine

Concept Introduction:

Expense recognition principle- It states that all expenses in a business should be recognized and reported in the same time-period as the revenue the business generates. It can be the same time when the cash is paid, or it might predate or follow with the revenue amount realized. This is commonly referred as matching principle.

Requirement 4:

To determine the principle when the cost paid for a delivery truck is recorded as an asset and expensed over the next 5 years as it is used to help generate revenue.

Expert Solution & Answer

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Answer 3

Question

Chapter 2, Problem 19CE

To determine

Concept Introduction:

Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting.

Requirement 1:

To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

To determine

Concept Introduction:

Conservatism principle- This principle states that the accountant should always be conservative in recording all uncertain or estimated revenue and always record and report all uncertain expense or loss.

Requirement 2:

To determine the principle when inventory, which was damaged by flood, is reported at the lower of its cost or market value.

To determine

Concept Introduction:

Historical cost- It states that the resources reported in financial statements should be recorded at initial acquisition cost that is the exchange price at the time the resource is acquired.

Requirement 3:

To determine the principle when land, located in a desirable location, is reported at original acquisition price, even though its value has increased by over 100% since it was purchased.

To determine

Concept Introduction:

Expense recognition principle- It states that all expenses in a business should be recognized and reported in the same time-period as the revenue the business generates. It can be the same time when the cash is paid, or it might predate or follow with the revenue amount realized. This is commonly referred as matching principle.

Requirement 4:

To determine the principle when the cost paid for a delivery truck is recorded as an asset and expensed over the next 5 years as it is used to help generate revenue.

Expert Solution & Answer

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Answer 4

Question

Chapter 2, Problem 19CE

To determine

Concept Introduction:

Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting.

Requirement 1:

To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

To determine

Concept Introduction:

Conservatism principle- This principle states that the accountant should always be conservative in recording all uncertain or estimated revenue and always record and report all uncertain expense or loss.

Requirement 2:

To determine the principle when inventory, which was damaged by flood, is reported at the lower of its cost or market value.

To determine

Concept Introduction:

Historical cost- It states that the resources reported in financial statements should be recorded at initial acquisition cost that is the exchange price at the time the resource is acquired.

Requirement 3:

To determine the principle when land, located in a desirable location, is reported at original acquisition price, even though its value has increased by over 100% since it was purchased.

To determine

Concept Introduction:

Expense recognition principle- It states that all expenses in a business should be recognized and reported in the same time-period as the revenue the business generates. It can be the same time when the cash is paid, or it might predate or follow with the revenue amount realized. This is commonly referred as matching principle.

Requirement 4:

To determine the principle when the cost paid for a delivery truck is recorded as an asset and expensed over the next 5 years as it is used to help generate revenue.

Expert Solution & Answer

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Answer 5

Chapter 2, Problem 19CE

To determine

Concept Introduction:

Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting.

Requirement 1:

To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

To determine

Concept Introduction:

Conservatism principle- This principle states that the accountant should always be conservative in recording all uncertain or estimated revenue and always record and report all uncertain expense or loss.

Requirement 2:

To determine the principle when inventory, which was damaged by flood, is reported at the lower of its cost or market value.

To determine

Concept Introduction:

Historical cost- It states that the resources reported in financial statements should be recorded at initial acquisition cost that is the exchange price at the time the resource is acquired.

Requirement 3:

To determine the principle when land, located in a desirable location, is reported at original acquisition price, even though its value has increased by over 100% since it was purchased.

To determine

Concept Introduction:

Expense recognition principle- It states that all expenses in a business should be recognized and reported in the same time-period as the revenue the business generates. It can be the same time when the cash is paid, or it might predate or follow with the revenue amount realized. This is commonly referred as matching principle.

Requirement 4:

To determine the principle when the cost paid for a delivery truck is recorded as an asset and expensed over the next 5 years as it is used to help generate revenue.

Answer 6

Chapter 2, Problem 19CE

To determine

Concept Introduction:

Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting.

Requirement 1:

To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

Answer 7

Chapter 2, Problem 19CE

To determine

Concept Introduction:

Revenue recognition principle- It states that revenue should be recognized and reported in financial statementswhen services or products are provided to the customers and not the payment is received. In other words, entity should not report income when they receive cash from their customers to record revenue from sales. This principle is consistent with accrual basis of accounting.

Requirement 1:

To determine the principle if Quagmire company recognizes revenue when goods are delivered to a customer, even though cash will not be collected from customer for 30 days.

Answer 8

To determine

Concept Introduction:

Conservatism principle- This principle states that the accountant should always be conservative in recording all uncertain or estimated revenue and always record and report all uncertain expense or loss.

Requirement 2:

To determine the principle when inventory, which was damaged by flood, is reported at the lower of its cost or market value.

Answer 9

To determine

Concept Introduction:

Conservatism principle- This principle states that the accountant should always be conservative in recording all uncertain or estimated revenue and always record and report all uncertain expense or loss.

Requirement 2:

To determine the principle when inventory, which was damaged by flood, is reported at the lower of its cost or market value.

Answer 10

To determine

Concept Introduction:

Historical cost- It states that the resources reported in financial statements should be recorded at initial acquisition cost that is the exchange price at the time the resource is acquired.

Requirement 3:

To determine the principle when land, located in a desirable location, is reported at original acquisition price, even though its value has increased by over 100% since it was purchased.

Answer 11

To determine

Concept Introduction:

Historical cost- It states that the resources reported in financial statements should be recorded at initial acquisition cost that is the exchange price at the time the resource is acquired.

Requirement 3:

To determine the principle when land, located in a desirable location, is reported at original acquisition price, even though its value has increased by over 100% since it was purchased.

Answer 12

To determine

Concept Introduction:

Expense recognition principle- It states that all expenses in a business should be recognized and reported in the same time-period as the revenue the business generates. It can be the same time when the cash is paid, or it might predate or follow with the revenue amount realized. This is commonly referred as matching principle.

Requirement 4:

To determine the principle when the cost paid for a delivery truck is recorded as an asset and expensed over the next 5 years as it is used to help generate revenue.

Answer 13

To determine

Concept Introduction:

Expense recognition principle- It states that all expenses in a business should be recognized and reported in the same time-period as the revenue the business generates. It can be the same time when the cash is paid, or it might predate or follow with the revenue amount realized. This is commonly referred as matching principle.

Requirement 4:

To determine the principle when the cost paid for a delivery truck is recorded as an asset and expensed over the next 5 years as it is used to help generate revenue.

Answer 14

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Ch. 2 - What is the conceptual framework of accounting?Ch. 2 - Prob. 2DQ Ch. 2 - Prob. 3DQ Ch. 2 - Prob. 4DQ Ch. 2 - Describe the constraint on providing useful...Ch. 2 - Prob. 6DQ Ch. 2 - Prob. 7DQ Ch. 2 - Prob. 8DQ Ch. 2 - Of all the events that occur each day, how would...Ch. 2 - Prob. 10DQ

Chapter 2 Solutions