Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 1, Problem 1.1E
Accrual accounting
• LO1–2
Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy.
| Year 1 | Year 2 | |
| Amounts billed to clients for services rendered | $170,000 | $220,000 |
| Cash collected from clients | 160,000 | 190,000 |
| Cash disbursements | ||
| Salaries paid to employees for services rendered during the year | 90,000 | 100,000 |
| Utilities | 30,000 | 40,000 |
| Purchase of insurance policy | 60,000 | –0– |
In addition, you learn that the firm incurred utility costs of $35,000 in year 1, that there were no liabilities at the end of year 2, no anticipated
Required:
1. Calculate the net operating
2. Prepare an income statement for each year similar to Illustration 1–4 according to the accrual accounting model.
3. Determine the amount of receivables from clients that the firm would show in its year 1 and year 2
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58
Part 2: Accounting for Cash and Payroll
LO 1, 2, 3
EXERCISE 7-7 Precision Labs has two employees. The following information was taken
from its individual earnings records for the month of September. Determine the missing
amounts assuming that the Social Security tax is 6.2 percent, the Medicare tax is 1.45
percent, and the state income tax is 20 percent of the federal income tax. Assume that the
employees are married and have one withholding allowance. All earnings are subject to
Social Security and Medicare taxes. Round amounts to the nearest penny.
Practice Exercises
1,2,3
Brown
Ringness
Total
Regular earnings
Overtime earnings
Total earnings
$3,500.00
2$
24
120.00
$3,646.00
24
24
Federal income tax withheld
$ 320.00
2$
2$
State income tax withheld
36.76
169.76
Social Security tax withheld
Medicare tax withheld
226.05
52.87
39.70
Charity withheld
35.00
97.00
$ 697.92
$ 527.02
$ 2,210.98
Total deductions
2$
Net pay
2$
51
Transmute Company paid or collected during the current year the following items:
Insurance premium paid
15,400
Interest collected
30,900
Salaries paid
135,200
The following balances have been excerpted from Transmute’s balance sheet:
December 31
January 1
Prepaid insurance
1,200
1,500
Interest receivable
3,700
2,900
Salaries payable
12,300
10,600
The insurance expense on the income statement for the current year was
Note for your final answer:
Do not use peso sign
Do not use comma
Do not use decimal point
Round off your final answer to the nearest whole number
Chapter 1 Solutions
Intermediate Accounting
Ch. 1 - Prob. 1.1QCh. 1 - What is meant by the phrase efficient allocation...Ch. 1 - Identify two important variables to be considered...Ch. 1 - What must a company do in the long run to be able...Ch. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Explain what is meant by: The benefits of...Ch. 1 - Prob. 1.17QCh. 1 - Briefly define the financial accounting elements:...Ch. 1 - Prob. 1.19QCh. 1 - What is the going concern assumption?Ch. 1 - Prob. 1.21QCh. 1 - Prob. 1.22QCh. 1 - What are two advantages to basing the valuation of...Ch. 1 - Describe how revenue recognition relates to...Ch. 1 - What are the four different approaches to...Ch. 1 - In addition to the financial statement elements...Ch. 1 - Briefly describe the inputs that companies should...Ch. 1 - Prob. 1.28QCh. 1 - Prob. 1.29QCh. 1 - Prob. 1.30QCh. 1 - Prob. 1.31QCh. 1 - Prob. 1.32QCh. 1 - Accrual accounting LO12 Cash flows during the...Ch. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Prob. 1.3BECh. 1 - Basic assumptions and principles LO17 through...Ch. 1 - Prob. 1.5BECh. 1 - Prob. 1.6BECh. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Accrual accounting LO12 Listed below are several...Ch. 1 - Prob. 1.3ECh. 1 - Prob. 1.4ECh. 1 - Prob. 1.5ECh. 1 - Financial statement elements LO17 For each of the...Ch. 1 - Concepts; terminology; conceptual framework LO17...Ch. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Basic assumptions and principles LO18, LO19...Ch. 1 - Prob. 1.12ECh. 1 - Prob. 1.13ECh. 1 - Prob. 1.14ECh. 1 - Prob. 1.15ECh. 1 - Prob. 1.1BYPCh. 1 - Research Case 12 Accessing SEC information through...Ch. 1 - Prob. 1.3BYPCh. 1 - Prob. 1.4BYPCh. 1 - Ethics Case 18 The auditors responsibility LO14...Ch. 1 - Prob. 1.9BYPCh. 1 - Judgment Case 110 GAAP, comparability, and the...Ch. 1 - Prob. 1.11BYPCh. 1 - Prob. 1.12BYPCh. 1 - Analysis Case 113 Expense recognition LO19...Ch. 1 - Prob. 1.14BYPCh. 1 - Real World Case 115 Elements; disclosures; The...Ch. 1 - Prob. 1.16BYPCh. 1 - Target Case LO19 Target Corporation prepares its...
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