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Katarina [22]
3 years ago
14

Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, a

nd Roy.
Year 1 Year 2
Amounts billed to clients for services rendered $ 180,000 $ 230,000
Cash collected from clients 155,000 185,000
Cash disbursements Salaries paid to employees for services rendered during the year 85,000 95,000
Utilities 27,500 35,000
Purchase of insurance policy 58,500 0
In addition, you learn that the firm incurred utility costs of $32,500 in year 1, that there were no liabilities at the end of year 2, no anticipated bad debts on receivables, and that the insurance policy covers a three-year period.
Required:
1. Calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the firm would show in its year 1 and year 2 balance sheets prepared according to the accrual accounting model.
2. Prepare an income statement for each year according to the accrual accounting model.
Business
1 answer:
maw [93]3 years ago
4 0

Answer:

Income statement for year 1

Service revenue                                       $180,000

Operating expenses:

  • Employees salaries $85,000
  • Utilities $32,500
  • Insurance expense $19,500            <u>$137,000</u>

Net income                                                 $43,000

Income statement for year 2

Service revenue                                       $230,000

Operating expenses:

  • Employees salaries $95,000
  • Utilities $30,000
  • Insurance expense $19,500            <u>$144,500</u>

Net income                                                 $85,500

Year 1 accounts receivable balance = $180,000 - $155,000 = $25,000

Year 2 accounts receivable balance = $230,000 - $185,000 + $25,000 = $70,000

Cash flows from operating activities year 1:

Net income $43,000

Adjustments to net income:

Increase in accounts payable $5,000

Increase in accounts receivable ($25,000)

Increase in prepaid insurance ($39,000)

Net cash provided by operating activities ($16,000)

Cash flows from operating activities year 1:

Net income $85,500

Adjustments to net income:

Decrease in prepaid insurance $19,500

Increase in accounts receivable ($45,000)

Decrease in accounts payable ($5,000)

Net cash provided by operating activities $55,000

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Valvano Corporation uses a job-order costing system with a single, plantwide, predetermined overhead rate based on machine-hours
alukav5142 [94]

Answer:

The estimated total manufacturing overhead is closest to $550,000

Explanation:

Total manufacturing overhead = variable + fixed overhead absorbed

Fixed overhead absorbed = Overhead absorption rate × machine hour

Overhead absorption rate = Estimated overhead/Estimated machine hours

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Coronado Company's record of transactions concerning part X for the month of April was as follows.
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Answer:

1.FIFO 5,631.4

2.LIFO 7,685

3.8.8542 per unit

Explanation:

Coronado Company's

1)First-in, first-out (FIFO)

(520×8.47+ 150×8.18)

= 4,404.4+1,227

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2)Last-in, first-out (LIFO)

(420×7.30+ 620×7.45)

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3.Cost of goods available for sale

Date Transactions Units ×Rate =Total

Apr-01 Beginning inventory 420 ×$7.30 =$3,066

Apr-04 Purchase 720×$7.45 =$5,363

11-Apr Purchase 620 ×$7.74 =$4,798.8

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720+620+520+920+520=3,300

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$29,219 / 3,300

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