Questions related to cash basis accounting
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Parcell Company contracted on 4/1/07 to construct a building for $2,500,000. The project was completed in 2005. Additional data follow:...
Parcell Company contracted on 4/1/07 to construct a building for $2,500,000. The project was completed in 2005. Additional data follow: 2007 2008 2009 Costs incurred to date $ 560,000 $1,350,000 $1,900,000 Estimated cost to complete 1,040,000 450,000 Billings to date 500,000 2,000,000 2,500,000 Collections to date 400,000 1,300,000 2,400,000 Instructions (a) Calculate the income recognized by Parcell under the percentage-of-completion method of...
A man age 55 is a member of his employer s occupational pension scheme. He has been a member of the scheme since he joined the...
A man age 55 is a member of his employer s occupational pension scheme. He has been a member of the scheme since he joined the employer at age 35, and he expects to retire at age 65. However, at any time before age 65 he could: (a) die; (b) leave the employer and hence have to leave the pension scheme; or (c) be forced to retire early because of ill health. His salary is 40,000 per annum, and this is not expected to change in future. It is assumed to be paid continuously. The...
Chapter 5: Problem I: 5-34 Basis of PropertyReceived as a Gift Doug receives a duplex as a gift from his uncle. The uncle s basis...
Chapter 5: Problem I: 5-34 Basis of PropertyReceived as a Gift Doug receives a duplex as a gift from his uncle. The uncle s basis for the duplex and land is $90,000. At the time of the gift, the land and building have FMV of $40,000 and $80,000, respectively. No gift tax is paid by Doug s uncle at the time of the gift. A. To determine gain, what is Doug s basis for the land? B. To determine gain, what is Doug s basis for the building? C. Will the basis of the land and...
The Vanity Corporation organized and began operations in January. The corporation's ten equal shareholders elect to have Vanity taxed as...
The Vanity Corporation organized and began operations in January. The corporation's ten equal shareholders elect to have Vanity taxed as an S corporation, and the election and necessary consents are filed in a timely manner. For its first tax year ended December 31, Vanity has ordinary income of $64,000 and short-term capital gains of $16,000. During the year, it distributes $30,000 in cash equally to its ten shareholders. For the year, how much income should each shareholder report and how...
Which of the following is not an accurate representation concerning revenue recognition? a. Revenue from selling products is recognized...
Which of the following is not an accurate representation concerning revenue recognition? a. Revenue from selling products is recognized at the date of sale, usually interpreted to mean the date of delivery to customers. b. Revenue from services rendered is recognized when cash is received or when services have been performed. c. Revenue from permitting others to use enterprise assets is recognized as time passes or as the assets are used. d. Revenue from disposing of assets other than...
On June 1, 2008 Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this...
On June 1, 2008 Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this transaction, the company's accountant will
Perkins Company assembled the following information in completing its March bank reconciliation: balance per bank $3,820 outstanding...
Perkins Company assembled the following information in completing its March bank reconciliation: balance per bank $3,820 outstanding checks $775; deposits in transit $1,250; NSF check $80; bank service charge $25; cash balance per books $4,400. As a result of this reconciliation, Perkins will
Machina Corporation is financing an ongoing construction project. The firm needs $8 million of new capital during each of the next three...
Machina Corporation is financing an ongoing construction project. The firm needs $8 million of new capital during each of the next three years. The firm has a choice of issuing new debt and equity each year as the funds are needed, or issuing the debt now and the equity later. The firm's capital structure is 40 percent debt and 60 percent equity. Flotation costs for a single debt issue would be 1.6 percent of the gross debt proceeds. Yearly flotation costs for three separate issues of debt...
The vice-president of marketing and the director of human resources have developed a proposal whereby the company would compensate the...
The vice-president of marketing and the director of human resources have developed a proposal whereby the company would compensate the sales force on a strictly commission basis using 20% of net sales. Given the increased incentive, they expect net sales to increase by 15%. As a result, they estimate that gross profit will increase by $53,061 and operating expenses by $88,322. Compute the expected new net income. (Hint: You do not need to prepare an income statement).
On December 31, 20x7, Voss Corporation had 150,000 shares of common stock issued and outstanding. On October 1, 20x8, an additional...
On December 31, 20x7, Voss Corporation had 150,000 shares of common stock issued and outstanding. On October 1, 20x8, an additional 20,000 shares of common stock were issued for cash. During 20x8, Voss declared and paid dividends of $100,000 on its 10,000 shares of nonconvertible preferred stock. During 20x8, Voss declared and paid dividends of $80,000 on its common stock. Net income for 20x8 amounted to $500,000. The earnings per share (rounded to the nearest cent) for 20x8 are
Reliable Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and...
Reliable Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the MACRS rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year life. What is the project's operating cash flow during Year 1?
RedJet Airlines booked a reservation for a flight from Chicago to Orlando for Jiang on March 12. RedJet charged $560 to Jiang's Visa...
RedJet Airlines booked a reservation for a flight from Chicago to Orlando for Jiang on March 12. RedJet charged $560 to Jiang's Visa card on March 13 and received the cash from Visa on April 1. The flight commenced on April 22. How much revenue would be recognized on each of the above four dates and when?