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Akimi4 [234]
3 years ago
11

Carillo Industries collected $108,000 from customers in 2017. Of the amount collected, $25,000 was for services performed in 201

6. In addition, Carillo performed services worth $36,000 in 2017, which will not be collected until 2018.
Carillo Industries also paid $72,000 for expenses in 2017. Of the amount paid, $30,000 was for expenses incurred on account in 2016. In addition, Carillo incurred $42,000 of expenses in 2017, which will not be paid until 2018.
Instructions:
(a) Compute 2017 cash-basis net income.
(b) Compute 2017 accrual-basis net income.
Business
1 answer:
Elis [28]3 years ago
8 0

Answer and Explanation:

The computation is shown below;

But before reaching to the final answers, first do the following calculations

Cash collected $108000

Add Services performed in 2017(not collected) $36000

less Services performed in 2016(collected in 2017) $25000

Revenue for 2017 $119,000

Cash paid in 2017 $72,000

Add Expense incurred not yet paid for 2017 $42000

Less Expense paid for 2016 -$30000

Expense for 2016 $84000

Now

a. Cash basis  

Revenue $108000

Less Expenses -$72,000

Net income $36000

b. Accrual basis  

Revenue for 2017 $119,000

Less Expenses for 2017 $84,000

Net income $35,000

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J Corp. common stock is priced at $36.50 per share. The company just paid its $0.50 quarterly dividend. Interest rates are 6.0%.
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Answer:

Explanation:

The time (T) = 6 months = 6/12 years  = 0.5 years

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The stock is priced [S(0)] = $36.50

The price the stock sells at 6 months (V_c) = $3.20

European call (K) = $35

The price (P) is given by:

P=V_c+K.e^{-rT}-S(0)+Dividends\\But, Dividends = 0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Therefore, P=V_c+K.e^{-rT}-S(0)+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Substituting:\\P=3.2+35*e^{-0.06*0.5}-36.5+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\P=3.2+33.9656-36.5+0.4926+0.4852\\P=1.64

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3 years ago
Which of the following would indicate an improvement in a company's financial position, holding other things constant? a. The in
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James borrows $300,000 for a home from Bank A. Bank A resells the right to collect on that loan to Bank B. Bank B securitizes th
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3 years ago
Carter Corporation made sales of $ 825 million during 2018. Of this​ amount, Carter collected cash for $ 710 million. The​ compa
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Answer:

Part (a) The net income of carter is $115 million.

Part (b) The closing cash balance at the end of year is $360.

Explanation:

Part (a) Net Income Computation:

Sales                                     $825

Cost of goods sold             <u>(</u><u>$290</u><u>)</u>

Gross Profit                          $535

Other Expenses                  <u>(</u><u>$425</u><u>)</u>

Net income                          $115 Million

Part (b) The cash balance of  Carter is not dependent on non cash flows. So the cash transactions would be considered here for cash balance computation.

Opening Cash position               $290

Collection from Sales                  $710

Inventory Invoices paid              ($350)

For  Everything                           <u>($290)</u>

Closing Cash balance                 $360

4 0
3 years ago
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