Financial accounting
3rd Edition
ISBN: 9780077506902
Author: David J Spieceland Wayne Thomas Don Herrmann
Publisher: Mcgraw-Hill
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 4, Problem 4.19E
Consider the following information:
1. Service Revenue for the year = $80,000. Of this amount, $70,000 is collected during the year and $10,000 is expected to be collected next year.
2. Salaries Expense for the year = $40,000. Of this amount, $35,000 is paid during the year and $5,000 is expected to be paid next year.
3. Advertising Expense for the year = $10,000. All of this amount is paid during the year.
4. Supplies Expense for the year = $4,000. No supplies were purchased during the year.
5. Utilities Expense for the year = $12,000. Of this amount, $11,000 is paid during the year and $1,000 is expected to be paid next year.
6. Cash collected in advance from customers for services to be provided next war (Unearned Revenue) = $2,000.
Required:
1. Calculate operating
2. Calculate net income.
3. Explain why these two amounts differ.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The information provided below was taken from the records of Chotoo Projects for the financial year ended 31 May 2020. Extract of statement of comprehensive income for the year ended 31 May 2020 R Revenue 480 000 Direct costs 240 000 Rent income 150 000 Advertising 4 800 Salaries and wages 90 000 Rates and taxes 1 200 Other operating expenses 80 000 21 Additional information 1. Revenue is calculated as direct cost plus 25%. 2. Revenue is divided equally each month. Revenue is expected to increase by 18% for the financial year ending 31 May 2021. 3. Fifty percent (50%) of the revenue is for cash and the balance is on credit. Debtors normally pay their accounts as follows: 40% in the month of the invoice, and these debtors are entitled to a 5% discount; 55% one month after the invoice; The balance is usually written off as bad debts. 4. Purchases for June and July are expected to be 30 000 per month. All purchases are for cash. 5. In terms of the lease agreement rent is received…
Compute the pretax profit (income before income taxes) if the net income is $140,000 and the income tax rate is 30 percent.
Question: How much is the income or loss after tax for 2021? Kindly prepare a good presentation of your computation.
The store opened on January 01, 2021 and had total sales for the 1st month of Php 300,000.00.
Corresponding increase in sales of 10% was realized for the remaining months of the 1st quarter.
Second quarter sales were the same as the 1stquarter, corresponding 5% increase for the 3rd quarter, and 4thquarter sales is the same as the 1st quarter.
The company had a miscellaneous income for the year of Php 50,000.00 but it seems that it has no effect on its financial since they also incurred the same amount for the spoilages, considered as other expense.
Let us assume that the annual tax percentage will be 12%.
Sales breakdown is: 70% from the beverages and the remaining percentage for the pastry line.
Total investment of Ms. Cortesi amounted to Php1.5M and she is expecting the Payback Period on the 3rd year.
Renovation cost of the rented space of the store amounted to Php…
Chapter 4 Solutions
Financial accounting
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - What is meant by the fraud triangle, and what can...Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - What is meant by separation of duties?Ch. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18RQCh. 4 - Prob. 19RQCh. 4 - Prob. 20RQCh. 4 - Prob. 21RQCh. 4 - 22.What are two primary reasons that the companys...Ch. 4 - Prob. 23RQCh. 4 - Prob. 24RQCh. 4 - Prob. 25RQCh. 4 - Prob. 26RQCh. 4 - Prob. 27RQCh. 4 - Describe the operating, investing, and financing...Ch. 4 - Prob. 29RQCh. 4 - Prob. 30RQCh. 4 - Prob. 4.1BECh. 4 - Match each of the following components of internal...Ch. 4 - Prob. 4.3BECh. 4 - Prob. 4.4BECh. 4 - During the year, the following sales transactions...Ch. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Prob. 4.8BECh. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - On January 12, Ferrell Incorporated obtains a...Ch. 4 - Prob. 4.17BECh. 4 - Prob. 4.18BECh. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Below are several amounts reported at the end of...Ch. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Below are cash transactions for Goldman...Ch. 4 - Prob. 4.17ECh. 4 - Prob. 4.18ECh. 4 - Consider the following information: 1.Service...Ch. 4 - Prob. 4.20ECh. 4 - Prob. 4.1APCh. 4 - Prob. 4.2APCh. 4 - Prob. 4.3APCh. 4 - Prob. 4.4APCh. 4 - Prob. 4.5APCh. 4 - Prob. 4.1BPCh. 4 - Prob. 4.2BPCh. 4 - Prob. 4.3BPCh. 4 - Prob. 4.4BPCh. 4 - Prob. 4.5BPCh. 4 - Prob. 4.1APCPCh. 4 - Prob. 4.2APFACh. 4 - Prob. 4.3APFACh. 4 - Prob. 4.4APCACh. 4 - Prob. 4.5APECh. 4 - Prob. 4.7APWC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Suppose a person invests a toal of $10,000 in two accounts. One account earns 8% annually and the other earns 9% annually. If the total ineterest earned from both accounts in a year is $860, how much is invested in each account?arrow_forwardSuppose a company spends $100,000 on research and development in 2021. As a result of the products developed, additional revenue is generated over the next five years totaling $600,000. When is the cost of the research and development in 2021 recognized as an expense? Multiple Choice Evenly over the period 2022-2026. Full amount in 2026. Evenly over the period 2021-2025. Full amount in 2021.arrow_forwardSisyphus Corp. has projected that their performance for the next five years result to the following: YEAR Revenue Cash Operating Expenses Net Income Before Tax Net Income After Tax Annual Capital Requirement FCFF 1 50 30 20 14 2.00 12.00 2 55.00 33.00 22 15.4 2.00 13.40 3 60.50 36.30 24.2 16.94 2.00 14.94 4 66.55 39.93 26.2 18.634 2.00 16.63 5 73.21 43.92 29.29 20.503 2.00 18.50 Growth Rate = 0.10 or 10% Requirement: How much is the Terminal Value? How much is the Free Cash Flow for years 1-5? How much is the Discounted Net Cash Flows to the Firm for years 1-5?arrow_forward
- Suppose $10,000 is deposited into an account that earns 10% per year for 5 years. At that point in time, uniform end-of-year withdrawals are made such that the account is emptied after the 15 th withdrawal. The size of these annual withdrawals is closest to what value? (a) $2118 (b) $2621 (c) $3410 (d) $16,105arrow_forwardAnusha Berhad’s sales pattern for the first quarter 2021 and projected revenues are as follows: Additional information:i. Historically, Anusha Berhad’s sales were on cash basis.ii. Anusha purchase raw material two month before the sales month and paid in cash equal to 60 percent of its sales.iii. Fixed monthly rent of RM11,000.iv. A depreciation expense is RM400 per month.v. Dividend of RM3,000 will be received at the end of each quarter.vi. Wages and salaries are estimated RM15,000 per month.vii. Anusha decide to repay RM40,000 of their loan on April.viii. Interest on accumulated loan is at 9 percent annual interest and paid in the following month.ix. Ending cash balance for the budget period is RM20,000 and it would like to maintain minimum desired balance of RM20,000 per month. Prepare a monthly cash budget for the first quarter 2021 for Anusha Berhad.arrow_forwardYou own a company. This company’s projected revenue is $30,000 for year 1, $31,000 for year 2, and $32,000 for year 3. From the 4th year onwards, revenue is expected to be 5% higher than the previous year. Assume the appropriate nominal discount rate is 8%, and all revenue is collected at the end of each year. Determine the present value of your sales revenue for the first 15 years, round to 2 decimal places. [show the step by step of how to find each result]arrow_forward
- You own a company. This company’s projected revenue is $30,000 for year 1, $31,000 for year 2, and $32,000 for year 3. From the 4th year onwards, revenue is expected to be 5% higher than the previous year. Assume the appropriate nominal discount rate is 8%, and all revenue is collected at the end of each year.Determine the present value of your sales revenue for the first 15 years, round to 2 decimal places.arrow_forwardABC Co. distributes annual bonus to its sales manager. The company reported 2 million profit for 2021 before bonus and income tax. Income tax of ABC Co. is 25%. What is the amount of bonus if bonus is computed at 10% of profit after taxes and bonuses?arrow_forward(a) Some people argue that APS is just a way for the government to pocket the revenue as soon as possible. Explain what is APS and what is its importance. (b) Company C has a year-end of 31 Dec. For the year ended 31 Dec 2020, it had a net profit of USD 8,000,000. While the chargeable income for USD 5,000,000.00 During the year 2020, the company file the following APS Details 1st quarter 2nd quarter 3rd quarter Amount (USD) 250,000.00 250,000.00 250,000.00 750,000.00 The net profit for the year 31 Dec 2019 is USD 20,000,000.00 and the chargeable income is USD 6,666,666.67 REQUIRED Calculate the total amount payable under the corporate tax for the year ended 31 Dec 2019.arrow_forward
- At the start of this year, $10,000 was deposited into an account that earns an effective annual interest rate of 4% per year for 10 years. Another $1,000 will be deposited at the end of each year for years 1-10, also earning 4% per year. All interest earned remains in the account. How much money is in this account at the end of year 10?arrow_forwardSuppose that at the end of each week for 30 years, $100 is deposited into an account that earns 6.8% annual interest, compounded weekly. (a) Find the total value in the account after the 30 years. (b) What is the total amount of the payments over the 30 years? (c) What is the total amount of interest earned over the 30 years?arrow_forwardPlease help asaparrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License