FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Chapter 2, Problem 71CP
a.
To determine
Prepare income statement.
b.
To determine
c.
To determine
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Mulroy Inc. is a company that owns 5 car dealerships. On October 25, 2021 the owner, Jack Mulroy pledged to contribute a new Ford Explorer to a local charity’s raffle for their annual fundraiser. The fundraiser will be held on November 30, 2021 at which time the car will be delivered to the winner of the raffle. Mulroy, Inc. delivered the Ford Explorer as pledged to the winner on November 30, 2021.
The accountant for Mulroy is unsure if the Contribution should be recognized as an expense in October when the pledge was made or in November when the car was delivered.
Accounting Issue: When should Mulroy recognize the contribution?
Your Interpretation of the Guidance: Mulroy Inc. should recognize the contribution in
October 2021
November 2021
To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations,
Deloch purchased the stereo systems for $157,000 and sold them for $294,000 cash. She provided her customers with a one-year
warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3
percent of sales. During the year, she paid $1,970 cash to replace a defective tuner.
Required
a-1. Prepare an income statement for Deloch's first year of operation.
a-2. Prepare a statement of cash flows for Deloch's first year of operation.
X Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required A1
Required A2
Prepare a statement of cash flows for Deloch's first year of operation. (Cash outflows should be indicated with a minus sign.)
DELOCH STEREOS
Statement of Cash Flows
To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations,
Deloch purchased the stereo systems for $159,000 and sold them for $298,000 cash. She provided her customers with a one-year
warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 4
percent of sales. During the year, she paid $1,790 cash to replace a defective tuner.
Required
a-1. Prepare an income statement for Deloch's first year of operation.
a-2. Prepare a statement of cash flows for Deloch's first year of operation.
Complete this question by entering your answers in the tabs below.
Required A1 Required A2
Prepare an income statement for Deloch's first year of operation.
DELOCH STEREOS
Income Statement
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0
Required A2 >
Chapter 2 Solutions
FINANCIAL ACCOUNTING
Ch. 2 - Prob. 1MCCh. 2 - Prob. 2MCCh. 2 - Prob. 3MCCh. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Prob. 4QCh. 2 - Prob. 5Q
Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10QCh. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Prob. 13QCh. 2 - Prob. 14MECh. 2 - Prob. 15MECh. 2 - Prob. 16MECh. 2 - Prob. 17MECh. 2 - Prob. 18MECh. 2 - Prob. 19MECh. 2 - Prob. 20MECh. 2 - Prob. 21MECh. 2 - Prob. 22MECh. 2 - Prob. 23MECh. 2 - Prob. 24MECh. 2 - Prob. 25MECh. 2 - Prob. 26MECh. 2 - Prob. 27MECh. 2 - Prob. 28MECh. 2 - Prob. 29MECh. 2 - Prob. 30MECh. 2 - Prob. 31MECh. 2 - Prob. 32MECh. 2 - Prob. 33MECh. 2 - Prob. 34ECh. 2 - Prob. 35ECh. 2 - Prob. 36ECh. 2 - Prob. 37ECh. 2 - Prob. 38ECh. 2 - Prob. 39ECh. 2 - Prob. 40ECh. 2 - Prob. 41ECh. 2 - Prob. 42ECh. 2 - Prob. 43ECh. 2 - Prob. 44ECh. 2 - Prob. 45ECh. 2 - Prob. 46ECh. 2 - Prob. 47ECh. 2 - Prob. 48ECh. 2 - Prob. 49PCh. 2 - Prob. 50PCh. 2 - Prob. 51PCh. 2 - Prob. 52PCh. 2 - Prob. 53PCh. 2 - Prob. 54PCh. 2 - Prob. 55PCh. 2 - Prob. 56PCh. 2 - Prob. 57PCh. 2 - Prob. 58PCh. 2 - Prob. 59PCh. 2 - Prob. 60PCh. 2 - Prob. 61PCh. 2 - Prob. 62PCh. 2 - Prob. 63PCh. 2 - Prob. 64PCh. 2 - Prob. 65PCh. 2 - Prob. 66PCh. 2 - Prob. 67PCh. 2 - Prob. 68PCh. 2 - Prob. 69PCh. 2 - Prob. 70PCh. 2 - Prob. 71CPCh. 2 - Prob. 72CP
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