For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred. A landscaper received a customer’s order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year. A company divides its income statements into four quarters for the year. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000. Brandy’s Flower Shop is forecasting its balance sheet for the next five years.

For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred. A landscaper received a customer’s order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year. A company divides its income statements into four quarters for the year. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000. Brandy’s Flower Shop is forecasting its balance sheet for the next five years.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter16: Accounting Periods And Methods

Section: Chapter Questions

Problem 33P

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For each of the following situations write the principle, assumption, or concept that justifies orexplains what occurred.A. A landscaper received a customer’s order and cash prepayment to install sod at a house that would notbe ready for installation until March of next year. The owner should record the revenue from thecustomer order in March of next year, not in December of this year.B. A company divides its income statements into four quarters for the year.C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at$205,000.D. Brandy’s Flower Shop is forecasting its balance sheet for the next five years.E. When preparing financials for a company, the owner makes sure that the expense transactions arekept separate from expenses of the other company that he owns.F. A company records the expenses incurred to generate the revenues reported.
For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred.A. A landscaper received a customers order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year.B. A company divides its income statements into four quarters for the year.C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000.D. Brandys Flower Shop is forecasting its balance sheet for the next five years.E. When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns.F. A company records the expenses incurred to generate the revenues reported.
Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.
Use the following information for Problems 30 and 31.On March 15, Calloway, Inc., paid property taxes of $480,000 for the calendar year.The journal entry at March 15 to record the payment of property taxes would include which of the following?a. A debit to Property Tax Expense of $480,000.b. A credit to Cash of $120,000.c. A debit to Prepaid Property Taxes of $360,000.d. A credit to Prepaid Property Taxes of $40,000.
Assume that you are the accountant for Computer Consultants. Prior to this year, Computer Consultants operated out of a leased office. However, the company purchased its own office building this year. The building is in an area where real estate values have been increasing an average of 6 percent per year. The owner of Computer Consultants has asked why you recorded depreciation on the building if real estate values are appreciating. Write a response to the owner explaining why depreciation must be recorded on the company’s accounting records.
Consider each of the transaction below independently. All expenditures were made in cash In march, the Cleanway Laundromat bought equipment. Cleanway paid $5,000 down and signed a noninterest-bearing note requiring the payment of $30,000 in nine months. The cash price for the equipment was $34,000. Prepare all necessary journal entries to record each the transaction. Use this format: Date Account Titles DR CR
A company owner has asked his accountant to research the photocopier equipment available from vendors, and to recommend the two best equipment alternatives. The company owner will decide on one piece of equipment topurchase. The fee charged for the accountant’s research was $500. The accountant’s report produced the following information: Photocopier (A) Photocopier (B) Initial cost, including installation $6,500 $ 6,000 Economic life 5 years 5 years Scrap value at end of economic life -0- -0- Initial training cost $ 500 $ 700 Annual maintenance $ 400 $ 300 Annual wage cost $12,500 $12,500 REQUIRED 1. Which photocopier should the company owner choose? Why? 2. The company owner requested your help in preparing the coming year company budget. Please, guide him to the best method and appropriate type from your perspective.
Mr X enrolls in a 12-month customer service assistance program for a computer software from CYBER COMPANY costing P1,200 per month on August 1, 20x8. Given that the computer assistance occurs evenly throughout the year, CYBER COMPANY uses the “proportion of time” as its measure for membership revenue, what is the amount of sales revenue to be recognized on December 31?
Peterson Law asks Executive Lawn to provide $100 of landscape maintenance. Executive Lawn provides the service on April 10. Consider three scenarios:a. Peterson pays for the lawn service in advance on March 28.b. Peterson pays for the lawn service on April 10, the day of service.c. Peterson pays for the lawn service the following month on May 2. If Peterson Law uses accrual-basis accounting, on which date would Peterson Law record the $100 expense for each scenario?
P11.3 You have the following information about a restaurant: Budgeted Cash Revenue Budgeted Credit Revenue August September October $30,300 29,500 27,900 25,100 32,400 $16,000 14,000 13,000 12,000 15,800 November December Collections on credit revenue average 90% in the month following the sales and the remaining 10% in the month following. Cost of sales (pur- chases) averages 38% of total sales revenue. Forty percent of cost of sales is on a cash basis, and 60% is paid in the month following purchase. Pay- roll costs (which are paid on a cash basis) are forecast to be $13,100 for October; $12,700 for November; and $12,200 for December. Other budgeted expenses according to the forecast income state- ments follow: October November December $2,500 300 Rent expense $2,500 $2,500 300 300 Insurance expense Utilities expense Other operating costs Depreciation (equipment) Interest expense 500 450 550 006 4,600 1,100 1,300 4,600 4,600 400 400 400
Consider the following transactions for Huskies Insurance Company: 1. Equipment costing $42,000 is purchased at the beginning of the year for cash. Depreciation on the equipment is $7,000 per year. 2. On June 30, the company lends its chief financial officer $50,000; principal and interest at 7% are due in one year. 3. On October 1, the company receives $16,000 from a customer for a one-year property insurance policy. Deferred Revenue is credited.Required: For each item, record the necessary adjusting entry for Huskies Insurance at its year-end of December 31. No adjusting entries were made during the year.
Craig has decided to start snow plowing during the winter months. He purchased a heavy-duty dump truck with plow and salter from Power Equipment for $40,000 on October 1st, 2026. He paid $1,000 as a down payment and the remaining balance on a 5% -7 year note to Power Equipment. You will be completing several accounting activities in regards to this purchase. What would the journal entry be for the check 1. Use the write check function in QB Online to record the entire purchase (down payment and capitalization of the truck and related liability). Use check number 171. Create accounts as needed in QB Online. You may find it helpful to write out the journal entry first before completing it in QB Online.