Chapter 3, Problem 3.6EYCT

After the presentation of your report on the examination of the financial statements to the board of directors of Piper Publishing Company, one of the new directors expresses surprise that the income statement assumes that an equal proportion of the revenue is recognized with the publication of every issue of the company's magazine. She feels that the "crucial event" in the process of earning revenue in the magazine business is the cash sale of the subscription. She says that she does not understand why most of the revenue cannot be "recognized" in the period of the cash sale. Instructions Discuss the propriety of timing the recognition of revenue in Piper Publishing Company's accounts with: a. The cash sale of the magazine subscription. b. The publication of the magazine every month. c. Over time, as the magazines are published and delivered to customers.

After the presentation of your report on the examination of the financial statements to the board of directors of Piper Publishing Company, one of the new directors expresses surprise that the income statement assumes that an equal proportion of the revenue is recognized with the publication of every issue of the company’s magazine. She feels that the “crucial event” in the process of earning revenue in the magazine business is the cash sale of the subscription. She says that she does not understand why most of the revenue cannot be “recognized” in the period of the cash sale. InstructionsDiscuss the propriety of timing the recognition of revenue in Piper Publishing Company’s accounts with:(a) The cash sale of the magazine subscription.(b) The publication of the magazine every month.(c) Over time, as the magazines are published and delivered to customers.

Assume you are the accounting manager for Logan’s Landscaping & Design.  On December 1,  2013, Logan Karver, the owner,  presents you with a check for $15,000 from a customer, Anna DeJuliet, to do a landscape design at her residence as soon as the ground thaws in the spring of 2014.  No work on this project can be done until then.  Logan wants you to deposit the check and include the $15,000 in the 2013 income statement.  He is expecting to include the $15,000 in his 2013 net income in order to secure a loan from the bank in January 2014 for some new equipment.  Explain how this check should be accounted for and why. (short answer)

The Washington Wizards just announced and began selling season's tickets for the 2021-2022 basketball season. The season tickets are sold for $3,960. This season ticket pass includes tickets to 30 home games that will take place November 2021 through May 2022. The Washington Wizards collect the money when customers reserve their season's tickets. When will the Wizards record revenue and for what amount? Please explain your answer.

Assume you are the accounting manager for Logan’s Landscaping & Design.  On December 1,  2013, Logan Karver, the owner,  presents you with a check for $15,000 from a customer, Anna DeJuliet, to do a landscape design at her residence as soon as the ground thaws in the spring of 2014.  No work on this project can be done until then.  Logan wants you to deposit the check and include the $15,000 in the 2013 income statement.  He is expecting to include the $15,000 in his 2013 net income in order to secure a loan from the bank in January 2014 for some new equipment.  Write a Business Memo in proper format to Logan explaining how this check should be accounted for and why.

Helen Hernandez, president of Double H Enterprises, applied for a $175,000 loan from Great Nations Bank. The bank requested financial statements as a basis for granting the loan. Helen instructed her accountant to provide the bank with a balance sheet, but to omit the other financial statements because her business incurred a net loss last year.   Helen contends that as the owner of the business, it is her right to withhold certain financial statements from the bank.  Do you agree with Helen? Why or why not?  What type of information would banks require from a loan applicant and why would the loan officer request this information?

You are the senior accountant for Terrier Company and the Board of Directors is discussing the possibility of implementing a retirement plan for the employees of the company.  They have asked for your guidance on whether they should move forward with creating a plan for retirement benefits, and if so, what type of plan would be beneficial to the employees while also creating the least amount of risk for the company (from an accounting and economic standpoint).  Prepare a memo to the Board addressing the 3 choices they have: 1) Do not implement a plan 2) Implement a defined contribution plan 3) Implement a defined benefit plan.   In your memo you should define each type of plan (DC vs. DB) and describe the pro’s and con’s of each of the 3 choices. Pro/con arguments should be focused on both the impact to the financial statements AND the impact to the employees of the organization (and how that could ultimately hurt or benefit the business).  You should use at least 3 outside sources to…

You are the senior accountant for Terrier Company and the Board of Directors is discussing the possibility of implementing a retirement plan for the employees of the company. They have asked for your guidance on whether they should move forward with creating a plan for retirement benefits, and if so, what type of plan would be beneficial to the employees while also creating the least amount of risk for the company (from an accounting and economic standpoint). Prepare a memo to the Board addressing the 3 choices they have: 1) Do not implement a plan 2) Implement a defined contribution plan 3) Implement a defined benefit plan. In your memo you should define each type of plan (DC vs. DB) and describe the pro's and con's of each of the 3 choices. Pro/con arguments should be focused on both the impact to the financial statements AND the impact to the employees of the organization (and how that could ultimately hurt or benefit the business). You should use at least 3 outside sources to…

Picasso Graphics is a graphics arts design consulting firm. Pablo Taylor, its treasurer and vice president of finance, has prepared a classified balance sheet as of July 31, 2016, the end of its fiscal year. This balance sheet will be submitted with Picasso Graphics’ loan application to Paris Trust & Savings Bank.In the Current Assets section of the balance sheet, Pablo reported a $56,000 receivable from Becky Holt, the president of Picasso Graphics, as a trade account receivable. Becky borrowed the money from Picasso Graphics in January 2014 for a down payment on a new home. She has orally assured Pablo that she will pay off the account receivable within the next year. Pablo reported the $56,000 in the same manner on the preceding year’s balance sheet.Evaluate whether it is acceptable for Pablo to prepare the July 31, 2016, balance sheet in this manner.