MGAB01H3 Chapter Notes - Chapter 3: Financial Statement, Deferred Income, Gross Margin
MGAB01H3 Full Course Notes
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Ravenna Company is a merchandiser that uses the indirect methodto prepare the operating activities section of its statement ofcash flows. Its balance sheet for this year is as follows: |
| Ending Balance | Beginning Balance | ||
Cash | $ | 52,800 | $ | 62,700 |
Accounts receivable | 45,100 | 48,400 | ||
Inventory | 60,500 | 55,000 | ||
Total current assets | 158,400 | 166,100 | ||
Property, plant, and equipment | 165,000 | 154,000 | ||
Less accumulated depreciation | 55,000 | 38,500 | ||
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Net property, plant, and equipment | 110,000 | 115,500 | ||
Total assets | $ | 268,400 | $ | 281,600 |
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Accounts payable | $ | 35,200 | $ | 62,700 |
Income taxes payable | 27,500 | 30,900 | ||
Bonds payable | 66,000 | 55,000 | ||
Common stock | 77,000 | 66,000 | ||
Retained earnings | 62,700 | 67,000 | ||
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Total liabilities and stockholdersâ equity | $ | 268,400 | $ | 281,600 |
During the year, Ravenna paid a $6,600 cash dividend and it solda piece of equipment for $3,300 that had originally cost $6,600 andhad accumulated depreciation of $4,400. The company did not retireany bonds or repurchase any of its own common stock during theyear. |
1. | What is the amount of the net increase or decrease in cash andcash equivalents that would be shown on the companyâs statement ofcash flows? |
3. | How much depreciation would the company add to net income on itsstatement of cash flows? |
5-a. | What is the amount and direction (+ or â) of the accountsreceivable adjustment to net income in the operating activitiessection of the statement of cash flows? |
5-b. | What does this adjustment represent? | ||||||
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7-a. | What is the combined amount and direction (+ or â) of theinventory and accounts payable adjustments to net income in theoperating activities section of the statement of cash flows? | ||||||
7-b. | What does this amount represent? | ||||||
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| Anderson Accounting Services LLC provides accounting and tax preparation and consulting services. Sometimes customers only wish to have financial statements and/or tax returns prepared. Sometimes customers bundle accounting and tax preparation with consulting services (to be provided over a period of time). Sometimes customers only wish to have consulting services provided over a period of time. Because Anderson is a service firm there is no cost of goods sold associated with their services. | ||||||||
| Customer is Civic Corporation | 1 | |||||
| Tax consulting begins on November 1st and runs through the next April | 11/1/X7 | |||||
| Date of contract | 11/1/X7 | |||||
| Length of consulting services | 6 months | months | ||||
| Tax return preparation occurs over the period February through April of | 20X8 | |||||
| Length of tax prepartion | 3 months | |||||
| Price of tax preparation to be allocated over the return preparation period | $ 2,000 | stand alone price | ||||
| Price of consulting services to be allocated over consulting period | $ 5,000 | stand alone price | ||||
| Customers are charged a lesser amount as follows for both tax and consulting | $ 6,000 | |||||
| Anderson Accounting Services LLC's current year end | 12/31/X7 | |||||
| Customers pay at the contract date for BOTH the consulting and tax preparation services. | ||||||
What are the performance obligations in the contract?
| A. | Tax preparation services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B. | Tax preparation services and tax consulting services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C. | Unable to determine | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| D.Tax consulting services QUESTION 3 Determine the transaction price that should be allocated to the consulting services.
QUESTION 4 Calculate the total revenue that should be recognized in the current accounting period.
QUESTION 5 What is the total amount in the deferred revenue account(s) at the end of the current accounting period?
QUESTION 6 What is the total amount of revenue that should be recognized in the NEXT accounting period period?
QUESTION 7 The following journal entry has what impact on the income statement? Debit Cash XXX Credit Deferred Revenue XXX
QUESTION 8 The following journal entry has what impact on the income statement? Debit Cash XXX Credit Accounts Receivable XXX
QUESTION 9
QUESTION 10
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