INTER. ACCOUNTING - CONNECT+ALEKS ACCESS
10th Edition
ISBN: 9781264770335
Author: SPICELAND
Publisher: MCG
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Newman Consulting Company maintains its records on a cash basis. During 2021 the following cash flows were recorded: cash received for services rendered to clients, $420,000; and cash paid for salaries, utilities, and advertising, $240,000, $35,000, and $12,000, respectively. You also determine that customers owed the company $52,000 and $60,000 at the beginning and end of the year, respectively, and that the company owed the utility company $6,000 and $4,000 at the beginning and end of the year, respectively. Determine accrual net income for the year.
Steel Corporation uses the cash basis of accounting to record transactions. Steel collected $950,000 from its customers during the current year. Customers owed Steel $60,000 of accounts receivable at the beginning of the year and $80,000 of accounts receivable at the end of the year. What is Steel's sales revenue for the year converted to the accrual basis of accounting?
Zambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company's
accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows
occurred during the year ended December 31, 2024:
Cash receipts:
From customers
Interest on note
Loan from a local bank
Total cash receipts.
Cash disbursements:
Purchase of inventory
Annual insurance payment
Payment of salaries
Dividends paid to
shareholders
Annual rent payment
Total cash disbursements
Selected balance sheet information:
Cash
Accounts receivable
Inventory
Prepaid insurance
Prepaid rent
Interest receivable
Note receivable
Equipment
Accumulated depreciation
Accounts payable (for
inventory)
Salaries payable
$
695,000
4,860
120,000
$
819,860
$
394,000
6,480
214,000
11,000
26,000
$
651,480
12/31/2023 12/31/2024
$ 27,000 $ 195,380
64,000
96,000
84,000
64,000
2,900
11,400
3,645
54,000
120,000
(42,000)
112,000
20,400
?
?
?
0
0
54,000
120,000
(54,000)…
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- You were engaged to audit the books of DEF Corporation who is in its first year and is using the cash basis of accounting. From the records of the company, you gathered the following cash receipts and disbursement records for 2018: Cash Receipts, P483,000; and Cash Disbursements, P247,500. The management requested you to compute its income under accrual basis. The following information are deemed relevant in your analysis: a. Depreciation of plant assets for 2018 computed by the straight-line method is P31,500. b. Prepaid insurance of P5,400, two-thirds of which relates to 2019, is included in the 2018 cash disbursements figure. This amount was recognized as insurance expense when it was paid. DEF Corporation received P36,000 in advance rent for space in its building. The entire amount is included in the cash receipts figure and was recognized as rent revenue when received. However, P20,000 of it was for space that will be provided in 2019. d. Employees are due P10,600 at the end of…arrow_forwardFive Incorporated maintains its accounting records using the cash basis but presents financial basis using the accrual method. For the year 2021, Five reported cash basis income of 532,000. Other information are as follows: Accounts Receivable, January 1 300,000 Accounts Receivable, December 31 150,000 Accounts Payable, January 1 400,000 Accounts payable, December 31 320,000 What is the accrual basis net income?arrow_forwardZambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company’saccountant obtains the necessary information to prepare accrual basis financial statements. The following cashflows occurred during the year ended December 31, 2018:Cash receipts:From customers $675,000Interest on note 4,000Loan from a local bank 100,000Total cash receipts $779,000Cash disbursements:Purchase of merchandise $390,000Annual insurance payment 6,000Payment of salaries and wages 210,000Dividends paid to shareholders 10,000Annual rent payment 24,000Total cash disbursements $640,000Selected balance sheet information:12/31/17 12/31/18Cash $ 25,000 $164,000Accounts receivable 62,000 92,000Inventory 80,000 62,000Prepaid insurance 2,500 ?Prepaid rent 11,000 ?Interest receivable 3,000 ?Note receivable 50,000 50,000Equipment 100,000 100,000Accumulated depreciation—equipment (40,000) (50,000)Accounts payable (for merchandise) 110,000 122,000Salaries and wages payable 20,000…arrow_forward
- You obtained the following information on the current account of Par Company during your examination of its financial statements for the year ended December 31, 2021. The bank statement on November 30, 2021 showed a balance of P 306,000 . Among the bank credits in November was customer’s noted for P 100,000 collected for the account of the company which the company recognized in December among its receipts. Included in the bank debits were costs of checkbooks amounting to P 1,200 and a P 40,000 check which was charged by the bank in error against Par Company account. Also in November, you ascertained that there were deposits in transit amounting to P 80,000 and outstanding checks totaling P 170,000. The bank statement for the month of December showed total credits of P 416,000 and total charges of P 204,000. The company’s books for December showed total debits of P 735,600 , total credits of P 407,200 and a balance of P485,600. Bank debit memos for December were: No. 121 for service…arrow_forwardGrier & Associates maintains its records on the cash basis. You have been engaged to convert its cash basis income statement to the accrual basis. The cash basis income statement, along with additional information, follows: Grier & Associates Income Statement (Cash Basis) For the Year Ended December 31, 2025 Cash receipts from customers $425,000 Cash payments: Salaries and wages $170,000 Income taxes 65,000 Insurance 40,000 Interest…arrow_forwardHaskins and Jones, Attorneys-at-Law, maintains its books on a cash basis. During 2021, the law firm collected $640,000 for services rendered to its clients and paid out $431,000 in expenses. You are able to determine the following information about accounts receivable, prepaid expenses, deferred service revenue, and accrued liabilities: January 1, 2021 December 31, 2021 Accounts receivable $ 81,000 $ 76,000 Prepaid insurance 6,400 8,300 Prepaid rent 11,100 9,000 Deferred service revenue 11,100 13,400 Accrued liabilities (for various expenses) 14,100 18,900 In addition, 2021 depreciation expense on office equipment is $31,500. Required: Determine accrual basis net income for 2021.arrow_forward
- Scan House, Inc. prepares financial records during the year on a cash basis. As the newly appointed controller, you have been asked to prepare the annual financial statement on an accrual basis. The following cash flows occurred during the year ended December 31, 2020: Cash receipts:From customers $765,000Interest on note 3,000Loan from a local bank 200,000Total cash receipts $968,000Cash disbursements:Purchase of merchandise $450,000Annual insurance payment 12,000Payment of salaries and wages 250,000Dividends paid to shareholders 25,000Annual rent payment 36,000Total cash disbursements $773,000 Selected balance sheet information: 12/31/19 12/31/20Cash $25,000 $220,000Accounts receivable 62,000 115,000Inventory 80,000 50,000Prepaid insurance 2,500…arrow_forwardLimerick Company maintained the accounting records using the cash basis of accounting. During the current year, the entity collected P5,000,000 in fees from clients. On January 1, accounts receivable of P800,000 and unearned fees of P500,000 had been recorded. On December 31, accounts receivable increased to P1,500,000 while unearned fees increased to P900,000. Under accrual basis, what is the service revenue for the current year?arrow_forwardOn October 31, 2024, Affleck Company's general ledger shows a cash account balance of $8,442. The company's cash receipts for the month total $74,620, of which $71,370 has been deposited in the bank. In addition, the company has written checks for $72,512, of which $71,252 has been processed by the bank. The bank statement reveals an ending balance of $12,822 and includes the following items not yet recorded by Affleck: bank service fees of $300, note receivable collected by the bank of $6,500, and interest earned on the note of $1,070. After closer inspection, Affleck realizes that the bank incorrectly charged the company's account $900 for an automatic withdrawal that should have been charged to another customer's account. The bank agrees to the error. Required: 1. Prepare a bank reconciliation to calculate the correct ending balance of cash on October 31, 2024. 2. Record the necessary entries to adjust the balance for cash.arrow_forward
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