LO.2 Selma operates a contractor's supply store. She maintains her books using the cash method. At the end of 2023, her accountant computes her accrual basis income that is used on her tax return. For 2023, Selma had cash receipts of $1,400,000, which included $200,000 collected on accounts receivable from 2022 sales. It also included the proceeds of a $100,000 bank loan. At the end of 2023, she had $250,000 in accounts receivable from customers, all from 2023 sales. a. Compute Selma's accrual basis gross revenues for 2023. b. Selma paid cash for all of the purchases. The total amount paid for merchandise in 2023 was $1,300,000. At the end of 2022, she had merchandise on hand with a cost of $150,000. At the end of 2023, the cost of merchandise on hand was $300,000. Compute Selma's gross income from merchandise sales for 2023.
LO.2 Selma operates a contractor's supply store. She maintains her books using the cash method. At the end of 2023, her accountant computes her accrual basis income that is used on her tax return. For 2023, Selma had cash receipts of $1,400,000, which included $200,000 collected on accounts receivable from 2022 sales. It also included the proceeds of a $100,000 bank loan. At the end of 2023, she had $250,000 in accounts receivable from customers, all from 2023 sales. a. Compute Selma's accrual basis gross revenues for 2023. b. Selma paid cash for all of the purchases. The total amount paid for merchandise in 2023 was $1,300,000. At the end of 2022, she had merchandise on hand with a cost of $150,000. At the end of 2023, the cost of merchandise on hand was $300,000. Compute Selma's gross income from merchandise sales for 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:LO.2 Selma operates a contractor's supply store. She maintains her books using the cash method. At the end
of 2023, her accountant computes her accrual basis income that is used on her tax return. For 2023, Selma
had cash receipts of $1,400,000, which included $200,000 collected on accounts receivable from 2022 sales. It
also included the proceeds of a $100,000 bank loan. At the end of 2023, she had $250,000 in accounts
receivable from customers, all from 2023 sales.
a. Compute Selma's accrual basis gross revenues for 2023.
b. Selma paid cash for all of the purchases. The total amount paid for merchandise in 2023 was
$1,300,000. At the end of 2022, she had merchandise on hand with a cost of $150,000. At the end of
2023, the cost of merchandise on hand was $300,000. Compute Selma's gross income from
merchandise sales for 2023.
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