GEN CMB(LL)INTRM ACCTG
18th Edition
ISBN: 9781260714067
Author: SPICELAND
Publisher: MCG
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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 balance sheets prepared according to the accrual accounting model.
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QUESTION 18.
A,B,C were three partners sharing profit and losses in the ratio of 3:2:1
Statement of financial position as at 31st December 2011
TZS “000"
TZS "000"
Bank balance
2,700 | Creditors
17,300
Stock
8,400 Bills payable
3,400
Debtors
7,000 Reserve fund
6,300
Provision for bad debt (350)
6,650 | Capitals
Bills receivable
2,400 | A
8,000
Motor vehicle
6250 B
5,000
Land and buildings
17,300 | C
3.000
16,000
Patents
4,300 A'S Loan
5,000
Total
48,000 Total
48,000
It was decided to admit “ D" as partner for one sixth share in the future profit on
the condition that he brings TZS 6,000,000 by way of capital and TZS 10,000,000
by the way of loan at 5 percent interest for a period of 5 years.
Before admission the following adjustments are to be made;-
1. Goodwill to be credited to the old partners on the basic of their share of profits
by raising goodwill account equal to twice the average of the profits of the
three years which were TZS 10,200,000 TZS 12,300,0000 TZS 14,400,000…
Problem 8
April, May and June decided to form a partnership on January 1, 2018 to operate a retail store. April and
May both owned a retail store with the following account balances:
ENTIA
APRIL
MAY
10,000,000
5,000,000
Cash
Receivables
10,000,000
15,000,000
Inventories
1911
35,000,000
20,000,000
5,000,000
Accounts Payable AGUIO CX 25,000,000
10,000,000
Notes Payable
15,000,000
25,000,000
(10%)
(5%)
Capital
40,000,000
15,000,000
The following are to be taken up by the partnership:
a. April and May will contibute all their assets and liabilities in the newly formed partnership.
The parties agree to provide a 10% and 20% allowance for bad debts on the receivables of April
and May.
b.
c. The inventories of April and May have fair values of P30,000,000 and P22,500,000, respectively.
d. The PPE of April and May have never been depreciated and should be depreciated by 40% and
30%, respectively.
e.
The interest payable on both notes payable were unrecorded and unpaid since the date of…
Problem 19
When examining the accounts of Ayala Corporation, it is ascertained that balance relatingto both receivables and payables are included in a single controlling account called“Receivables control” that has a debit balance of P4,850,000. An analysis of the make-upof this account revealed the following:Debit Accounts receivable – customers 7,800,000Accounts receivable – officers 500,000Debit balances – creditors 300,000Postdated checks from customers 400,000Subscriptions receivable 800,000CreditAccounts payable for merchandise 4,500,000Credit balances in customer’s accounts 200,000Cash received in advance from customers 100,000Expected bad debts 150,000After further analysis of the aged accounts receivable, it is determined that the allowancefor doubtful accounts be P200,000. What is the correct total of current net receivables?__________.
Chapter 1 Solutions
GEN CMB(LL)INTRM ACCTG
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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