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4 years ago

When does accrual basis accounting record a transaction?

2 answers:

7 0

The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recognized.

serg [7]4 years ago

5 0

When does accrual basis accounting record a transaction? When under new ownership.

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The Blossom Company has disclosed the following financial information in its annual reports for the period ending March 31, 2017

wlad13 [49]

Answer:

See below

Explanation:

See computation of cash flow below

Sales

$1,452,000

Less:

Cost of goods sold

(801,000)

Gross profit

$651,000

Less:

Depreciation

($175,000)

Interest expense

($89,575)

Earnings before tax(EBT)

$386,425

Less:

Tax 35% × $386,425

($135,249)

Add:

Depreciation

$175,000

Cash flow

$426,176

Therefore, cash flow to investors from operating activities is $426,176

8 0

3 years ago

Sheffield Inc. had beginning inventory of $12,000 at cost and $21,500 at retail. Net purchases were $142,872 at cost and $184,00

telo118 [61]

Answer:

Ending inventory at cost using the conventional retail method is $46,824

Explanation:

The conventional retail inventory method is the way for retailer to track cost of purchasing and sale prices. In this calculation, it includes markups but exclude markdowns, then results in a lower inventory value.

Sheffield Inc. had beginning inventory of $12,000 at cost and $21,500 at retail, so the ratio of inventory cost and sales prices is 55.81%.

As such, the inventory cost of $184,000 at retail = 55.81% x ($184,000 + $9,600) = $108,048

The ending inventory cost of Sheffield Inc. = beginning inventory of $12,000 + net purchases of $142,872 – inventory cost for sales $108,048 = $46,824

5 0

3 years ago

Chester Company has established internal control policies and procedures in order to achieve the following objectives:

Trava [24]

Answer:

B) Objectives 2 and 3

Explanation:

Accounting controls are procedures that help a company ensure the validity and accuracy of its financial statements.

Therefore, one of the main priorities of accounting controls would be to make sure that accounting records are correct. By ensuring the validity of accounting records, the company's assets are safeguarded, since the possibility of something missing or being incorrectly recorded diminishes.

4 0

3 years ago

Holly's is currently an all-equity firm that has 12,000 shares of stock outstanding at a market price of $36 a share. The firm h

vagabundo [1.1K]

Answer:

$31,104

Explanation:

EBIT / 12,000

= [EBIT - ($120,000 × .072)] / [12,000 - ($120,000 / $36)]

EBIT = $31,104

Therefore the minimum level of earnings before interest and taxes that the firm is expecting will be $31,104

8 0

4 years ago

Taylor and Sons buys equipment on Aug. 1, 2008 for $100,000 cash. They estimatethe equipment will have a salvage value of $13,00

larisa86 [58]

Answer:

Journal Entry

Dr. Depreciation Expense $7,250

Cr. Accumulated Depreciation $7,250

Explanation:

Depreciation is a expense which is charged against an asset over its useful life due to wear and tear of that asset. This expense is recorded as and Expense in Income statement and accumulated in an contra asset account asset account until the disposal of the asset.

Cost of Equipment = $100,000

Useful life of the asset = 5 years

Salvage value of the asset = $13,000

Depreciable value of the asset will be expenses equally every year over 5 years.

Depreciable value = Cost of the asset - Salvage value = $100,000 - $13,000 = $87,000

Depreciation Expense = Depreciable Value / Useful Life of the asset = $87,000 / 5 years = $17,400 per year

As only 5 month have been passed in 2008, the depreciation expense account will be charged as follow

Depreciation charge in 2008 = $17,400 x 5 / 12 = $7,250

8 0

4 years ago